Fed Beige Book: Middle East Tensions Raise Uncertainty; U.S. Firms Stay Cautious

April 16 — The Federal Reserve said economic activity in most U.S. regions continued to grow at a modest to slight pace, while fresh uncertainty and higher energy costs tied to a potential conflict with Iran began to weigh on conditions. In the Beige Book released Wednesday, the Fed said overall price increases remained moderate, but energy and fuel costs rose "significantly" across all 12 Federal Reserve districts. "The conflict in the Middle East is viewed as a significant source of uncertainty, increasing complexity for businesses in hiring, pricing, and capital investment decisions, prompting many to adopt a wait-and-see approach," the Fed said. The report, compiled by the New York Fed and based on information through April 6, outlines the war's early effects on the U.S. economy. Oil-price shocks linked to the conflict have lifted gasoline prices, helping push U.S. inflation in March to its largest increase since 2022. Several Fed policymakers have indicated they prefer to keep interest rates unchanged for an extended period while evaluating incoming data. (Jin10)