Fed flags inflation concerns amid Trump policy uncertainty

The Federal Reserve's Beige Book, released on Jan. 15, highlighted market concerns that changes to immigration and tariff policies could negatively impact the US economy, with expectations of prices rising in 2025.

Economic activity increased modestly in all 12 districts since late November 2024, while consumer spending rose, with most districts reporting strong holiday sales exceeded expectations.

Manufacturers have been building up their inventories in anticipation of higher tariffs expected with the new administration in the White House. Businesses expect that changes in trade policies will contribute to price increases this year.

Regarding the labor markets, employment rose overall, with six regions reporting slight increases. While wages grew at a moderate pace in most regions, some reports indicated a slowdown in wage pressures.

Published eight times a year, this report was prepared by the Federal Reserve Bank of Chicago, based on information collected until Jan. 6. Each of the 12 district banks collects information about the current economic conditions in their respective regions.