A store closing sign is displayed as customers shop during the last day of a store closing sale at a JOANN Fabric and Crafts location in a shopping mall following the company’s bankruptcy in Torrance, California on May 27, 2025.
Patrick T. Fallon | Afp | Getty Images
The U.S. economy contracted over the past six weeks as hiring slowed and consumers and businesses worried about tariff-related price increases, according to a Federal Reserve report Wednesday.
In its periodic “Beige Book” summary of conditions, the central bank noted that “economic activity has declined slightly since the previous report” released April 23.
“All Districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions,” the report added.
Hiring was “little changed” across most of the Fed’s 12 districts, with seven describing employment as “flat” amid widespread growth in applicants and lower turnover rates.
“All Districts described lower labor demand, citing declining hours worked and overtime, hiring pauses, and staff reduction plans. Some Districts reported layoffs in certain sectors, but these layoffs were not pervasive,” the report said.
On inflation, the report described prices as rising “at a moderate pace.”
“There were widespread reports of contacts expecting costs and prices to rise at a faster rate going forward. A few Districts described these expected cost increases as strong, significant, or substantial,” it said. “All District reports indicated that higher tariff rates were putting upward pressure on costs and prices.”
There were disparities, though, over expectations for how much prices would rise, with some businesses saying they might reduce profit margins or add “temporary fees or surcharges.”
“Contacts that plan to pass along tariff-related costs expect to do so within three months,” the report said.
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