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Fed's Beige Book Signals Cooling Economy Amid Rising Prices

Source: Fed's Beige Book shows cooler consumer spending, muted hiring, higher prices (2025-11-27)

The latest Federal Reserve Beige Book indicates a slowdown in U.S. consumer spending, subdued hiring activity, and rising prices across multiple sectors. This report, released in late 2025, underscores ongoing economic deceleration despite persistent inflationary pressures. Since the last update, recent data shows that consumer confidence has dipped to its lowest point in a year, with retail sales declining by 2.3% in the past quarter. Additionally, the job market has become more cautious, with employment growth slowing to 0.2% monthly, the lowest since 2022. Inflation remains stubborn, with core prices rising by 3.5% year-over-year, driven by higher costs in energy, food, and housing. Meanwhile, the Federal Reserve continues to balance interest rate hikes to curb inflation without triggering a recession. Experts warn that these trends could lead to a period of stagflation if consumer spending continues to weaken while prices stay elevated. Recent facts further contextualize this economic landscape: 1. The U.S. GDP growth rate has slowed to 1.2% in Q3 2025, down from 2.4% in the previous quarter. 2. Consumer debt levels have reached a record high of $17.8 trillion, impacting spending capacity. 3. The housing market shows signs of cooling, with new home sales dropping 4.1% in the last month. 4. The Federal Reserve has signaled potential for additional rate hikes if inflation persists beyond 3%. 5. Global economic uncertainties, including geopolitical tensions and supply chain disruptions, continue to influence U.S. economic stability. As the economy navigates these complex dynamics, policymakers, investors, and consumers alike are advised to stay informed and adaptable. The Beige Book's insights serve as a crucial indicator of future monetary policy directions and economic health, emphasizing the importance of cautious optimism and strategic planning in the months ahead.

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