Fed Report Flags Slower Growth, Rising Household Strain in US

(MENAFN) The US economy grew at a slight to modest pace in recent weeks, but growing financial pressure on households and uncertainty linked to conflict in the Middle East are weighing on activity, according to the Federal Reserve’s Beige Book released on Wednesday.

The report described the ongoing war in the region as a “major source of uncertainty” for businesses, affecting decisions related to hiring, pricing, and investment across the Federal Reserve’s 12 regional districts.

Overall, economic activity increased at a slight to modest pace in eight districts over the past six weeks. Two districts reported little change, while another two recorded slight to modest declines.

Consumer spending rose modestly overall, but several districts reported increasing price sensitivity and signs of financial strain among households. Demand for food assistance and social support services also continued to rise in many areas.

“Many Districts continued to report signs of consumer financial strain, increased price sensitivity, and rising demand at food banks and other social service organizations, while spending among higher-income consumers was resilient,” the report said.

The Beige Book also noted a widening gap in consumer behavior, with lower- and middle-income households facing greater pressure, leading to more cost-cutting and “trading down” to cheaper goods and services, while higher-income spending remained relatively stable.

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