Federal Reserve Beige Book: High oil prices have impacted all 12 U.S. Federal Reserve districts, with businesses forecasting further price increases.

The Federal Reserve’s latest Beige Book indicates that the U.S. economy overall remains in growth, though most sectors are seeing sluggish expansion. Among the 12 Federal Reserve districts, two reported moderate economic growth, three saw slight growth, four noted modest expansion, and three remained flat. Manufacturing performed relatively strongly, but consumer spending in most districts saw little change; more than half of the districts reported that consumption was primarily driven by high-income households. On the inflation front, three districts reported strong price increases, eight noted moderate rises, and four said price growth had accelerated from the prior period. All districts were impacted by rising oil prices; high diesel costs and fuel surcharges are pushing costs through the supply chain, while tariffs, insurance, and other commodity prices continue to exert pressure. Some businesses expect further price increases in the coming months as existing contracts expire and hedge and delivery agreements are renegotiated. On the employment front, most districts reported little change in employment levels, though shortages of professional, technical, and skilled workers persist. Five districts noted that some firms, after investing in artificial intelligence to boost productivity, have reduced headcount through attrition, delayed hiring, or plan to cut new positions. Meanwhile, rising inflation and benefit costs are driving workers to demand higher wages. The Beige Book notes that most businesses remain positive about the economic outlook for the coming months, but generally expect growth to be limited, with ongoing headwinds from energy prices, tariffs, and other uncertainties.