Fed's Beige Book Highlights Labor Market Weakness Amid Economic Stagnation

The Federal Reserve's Beige Book report indicates little change in U.S. economic activity recently. Half of the districts reported weaker labor demand, and consumer spending fell. The labor market remains stable yet soft, with low new unemployment claims but difficulty in job placement. Federal policy remains divided on further rate cuts.

The Federal Reserve's latest Beige Book report reveals that U.S. economic activity has remained largely unchanged recently, with noticeable weaknesses in the labor market. The report highlights that employment demand has decreased in about half of the 12 Federal Reserve districts, with consumer spending also on the decline.

The data, collected two weeks before each Federal Reserve policy meeting, provides essential insights into economic conditions, especially crucial in light of the recent government shutdown's impact on official statistics. The Beige Book's findings suggest that while new claims for unemployment benefits have decreased, long-term unemployment remains a challenge.

Amid these economic signals, the futures markets are indicating a high chance of another interest rate cut in the upcoming December meeting. This potential decision reflects ongoing debates among Federal Reserve policymakers, with opinions divided between protecting the job market and managing inflation risks.

(With inputs from agencies.)