Following the company’s bankruptcy in Torrance, California on May 27, 2025, closure signs for the store where customers shop are on display on the last day of the store at Joanne’s fabric and craft location in the shopping mall.
Patrick T. Fallon | AFP | Getty Images
According to a Federal Reserve report on Wednesday, the US economy has been contracting for the past six weeks as it is slowing employment and consumers and businesses worry about tariff-related price increases.
In a periodic summary of the terms of “beige book,” the central bank said that “economic activity has declined slightly” since the “previous report” was released on April 23.
“All districts reported an increase in levels of economic and policy uncertainty, which has led to hesitation and careful approaches to business and family decision-making,” the report added.
Employment has “almost been changed” across most of the Fed’s 12 districts. Seven described employment as “flat,” in the midst of widespread growth and reduced sales for applicants.
“All districts explained that they cite plans to reduce labor demand and reduce hours and reduce employment, employment and staff for after-hours. Some districts have reported layoffs in certain sectors, but these layoffs have not been widespread,” the report states.
Regarding inflation, the report explained that prices are rising “at a moderate pace.”
“There have been extensive reports of contacts that are expected to raise costs and prices at a faster rate in the future. We have explained that these expected increases in costs are strong, significant or substantive,” he said. “All district reports show that high tariff rates put upward pressure on costs and prices.”
However, there is a gap around expectations about how much prices will rise, with some companies saying they could reduce profit margins or add “temporary charges or additional charges.”
“We hope that plans to take over tariff-related expenses will do so within three months,” the report said.
The report covers a period of changing landscape for President Donald Trump’s tariffs.
In early May, Trump said he would ease the so-called mutual tariffs on China, but that he responded in kind and helped launch a rallies on Wall Street amid hoping that the duties would not be as Draconian as the original fears.
However, fear remains not only in the impact on inflation, as well as whether employment and the broader economy will slow down due to tariff-related slowdowns.
Thursday’s report mentioned 122 tariffs in comparison to the 107th in April.
Regionally, Boston, New York and Philadelphia all reported lower economic activity. Richmond, Atlanta and Chicago were among the districts reporting better growth.
In New York in particular, the Fed found “increased uncertainty” and input prices, “growing strong growth due to increased tariff-inducing costs. Richmond reported a slight increase in employment despite Trump’s efforts to cut federal salaries.
