Economic Growth is Cooling, But Jobs Market Remains Stable, Fed Report Shows

Economic growth is slowing down in some parts of the country, but the labor market remains stable, according to a Federal Reserve report released Wednesday.

The Beige Book presents policymakers with anecdotes about the economy from around the country to help them prepare for upcoming meetings. This month's book provided evidence that the labor market has slowed some since central bankers last met in late July.

Some areas of the country reported increases in headcount, and layoffs were rare, the report said. However, some businesses reduced hours, didn’t fill advertised positions or didn’t hire to replace departing employees.

“Employers were more selective with their hires and less likely to expand their workforces, citing concerns about demand and an uncertain economic outlook,” the August edition of the Beige Book said.

Prices Pressures Moderating, Expected to Stabilize

Due to the cooling labor market, wages increased at a slower pace, which also helped bring inflation under better control. The report said that price pressures were generally easing around the country, with some areas reporting lower costs for food, lumber and concrete. 

“Looking ahead, contacts generally expected price and cost pressures to stabilize or ease further in the coming months,” the report said.

Fed is Expected to Cut Interest Rates This Month

Fed officials will review the Beige Book before the Sept. 17-18 meeting of the central bank's policy committee. Fed officials are widely expected to decide to reduce the benchmark fed funds rate for the first time in four years.

The report should be enough to keep the Federal Reserve on track for a quarter-point interest rate cut at its meeting, wrote Michael Gregory, deputy chief economist at BMO Economics.

The report’s conclusions appear to align with some of the recent comments from Fed officials, including Chair Jerome Powell, who has said that prices have moderated enough to begin cutting interest rates, and Atlanta Federal Reserve Bank President Raphael Bostic, who in an essay released Wednesday said that the labor market is healthy but slowing down.