"Rising Uncertainty Over Tariffs...
Preemptive Price Hikes Reported"
The U.S. Federal Reserve (Fed) has released an economic assessment indicating that corporate concerns over uncertainties stemming from 'Trump-induced tariffs' have significantly increased. The number of regions experiencing stagnant or slowing economic activity has grown substantially, and companies' inflation expectations have intensified.
In the Beige Book, the Fed's economic report released on the 5th (local time), it stated, "Manufacturing contacts, ranging from petrochemical products to office equipment, expressed concerns about the potential impacts of changes in trade policy." It added, "Contacts in most regions expected prices to rise due to potential tariffs," and "there were reports that companies had preemptively raised prices."
Companies expressed caution regarding the tariff policies of President Donald Trump, who has taken on the role of 'tariff man.' According to an analysis by Bloomberg News, the recently released Beige Book mentioned the word 'tariff' 49 times and words related to 'uncertainty' 47 times.
The Beige Book stated, "Many companies pointed out that economic uncertainty has increased and expressed concerns about tariffs." It also included expressions such as "There were indications that changes in fiscal and trade policies pose inflation risks" and "There was a perception that there would be upward price pressures in response to tariffs," repeatedly confirming that companies' concerns about tariff-induced inflation are growing.
The number of regions where economic activity has slowed or stagnated has increased significantly. The Beige Book reported that among the 12 Federal Reserve Bank districts, four regions showed moderate growth in economic activity. Six regions experienced stagnation, and two regions contracted. Compared to the Beige Book released in January, where all 12 regions showed slight or moderate growth, this indicates a deterioration in economic activity within two months.
Separately from the Beige Book, a report from the Institute for Supply Management (ISM) also indicated signs of slowing manufacturing activity. In its February Manufacturing Purchasing Managers' Index (PMI) report released on the 3rd, ISM stated, "Customers (companies) are halting new orders due to tariff uncertainties," and "The administration has not provided clear guidance regarding the implementation of tariffs, making it more difficult to predict the impact on business."
Employment data also revealed that private companies are hesitant to hire due to concerns over policies such as tariffs. According to the February employment report released by ADP, a private labor market research firm, private sector nonfarm payrolls increased by 77,000. This figure fell significantly short of both the previous month's 186,000 and market expectations of 141,000, marking the smallest increase since July of last year.
The Beige Book is a report evaluating recent economic trends across the 12 Federal Reserve districts. It serves as foundational material for the Federal Open Market Committee (FOMC) regular meeting scheduled for the 18th-19th of this month.
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