US economic activity rose “slightly” between the end of November and the beginning of December, as stated by the United States Federal Reserve (Fed) in its Beige Book, a document that provides a detailed evaluation of the economy by the country’s twelve regional central banks. The document shows that the Consumer spending grew moderately thanks to stronger-than-expected holiday sales. Vehicle sales improved “modestly.”
Furthermore, the report has indicated that construction activity declined due to the high costs of financing and the materials used. Residential real estate activity remained unchanged as demand was restricted by high mortgage costs, while commercial demand did rebound. On the other hand, the industry saw its figures worsen “slightly”, while some districts reported that business owners were accumulating inventories in anticipation of the tariffs promised by Donald Trump. The energy sector exhibited a behavior “unequal“.
Likewise, the non-financial services sector improved “slightly” thanks to tourism and transportation, especially aeronautical, but the truck sector did suffer. For their part, financial service providers reported “modest” loan growth and little change in asset quality, although some concern remains about defaults among small businesses and lower-income households.
Agricultural conditions remained “weak“, with generally lower agricultural incomes and difficulties related to weather conditions in some areas. The spread of bird flu reduced the supply of eggs and raised prices.
Regarding business confidence, the Fed has indicated that there were more contacts that were optimistic than cautious about the macroeconomic outlook for 2025, despite the fact that several districts expressed nervousness about possible changes in immigration and tariff policy.
In terms of employment, the labor market improved in general terms, with six districts creating employment and another six remaining stable. However, there were hardly any layoffs and there were difficulties in finding talent. In addition, “greater uncertainty” was noted about future staffing needs.
In turn, prices grew “modestly” with flat to moderate growth. Retail sales rose moderately in most regions, although there were cases of stagnation or declines. Input costs increased.
Finally, Fed contacts expect prices to continue rising in 2025, with some warning of the possibility that increased tariffs will contribute to inflation.
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