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The Fed: Inflation slows, Fed’s Beige Book finds, but recession worries grow

The U.S. economy grew steadily through the fall and inflation eased a bit, a Federal Reserve survey found, but many businesses expressed “greater uncertainty or increased pessimism” about the outlook toward the end of the year.

The regular Fed survey, known as the Beige Book, painted a somewhat cloudier view of the economy compared to earlier in 2022.

The survey covers the period of early October through the third week of November. The U.S. has 12 Federal Reserve banks blanketing the country.

Here are the key points from the report:


“The pace of price increases slowed,” the Beige Book said, in response to weaker demand and easing supply-chain bottlenecks. Retailers in particular had to cut price in some cases to sell off an excess of goods.

Prices also fell for some commodities such as lumber while rent and home prices grew more slowly.

Further progress was likely to be slow, however. “Inflation was expected to hold steady or moderate further moving forward,” the survey said.

The increase in U.S. inflation in the 12 months ended in October stood at 7.7%. That’s down from a 40-year high of 9.1% in June.

The Fed is rapidly raising interest rates to try to cut inflation to pre-pandemic levels of around 2%.


Economic growth was “flat or up slightly” since the last Beige Book report, the Fed said.

Consumer spending held steady or even rose for services such as travel, but manufacturers turned in a mixed performance.

Five regional Fed banks reported somewhat faster economic growth, but the rest either saw no increase or experienced slight declines.


The labor market cooled off a bit. Businesses needed fewer workers and it was easier to retain existing ones, the Beige Book found, a sign that talk of recession is rooting more workers to their current jobs.

Companies might not resort as much to layoffs if the economy slows even further, however, given how hard it is to hire in the first place. The U.S. is experiencing its worst labor shortage in decades.

“Some contacts expressed a reluctance to shed workers in light of hiring difficulties, even though their labor needs were diminishing,” the Beige Book said.

Wage growth relaxed a bit, some companies said, and was likely to moderate even further.


More businesses said they were worried about a potential recession in 2023.

Fed officials in Washington acknowledge their fight to reduce high inflation could spawn a recession. Higher interest rates slow the economy by raising the borrowing costs for consumers and businesses.

For the first time since the Fed began raising interest rates, staff economists in Washington said a recession was possible in the next year, according to a summary of the bank’s last meeting in early November.

The bank’s previous minutes have not mentioned the possibility of a recession.

Many Wall Street

economists also believe a recession is likely next year.

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