In a live reaction to the Federal Reserve’s Beige Book release Wednesday afternoon, Bloomberg’s Federal Reserve and economics reporter Catarina Saraiva highlighted an increasingly cautious mood across U.S. businesses and consumers.
Saraiva stated the Federal Reserve’s Beige Book is “pretty similar” report to what we have seen this year, pointing to slight declines in activity and a labor market holding steady.
Saraiva emphasized how uncertainty, particularly tied to trade tensions and tariffs, continues to weigh on decision-making. She added that businesses and consumers “are kind of waiting to see how this tariff fight plays out.”
The Beige Book mentioned tariffs a total of 122 times, and that “economic activity declining modestly” was a recurring theme across multiple regions, she noted.
Consumer spending holds
Despite fears that tariffs would depress household spending, Saraiva said U.S. consumers have remained surprisingly resilient. The consumer, she said “has stayed strong” and a “big part of that is the labor market.” Retail sales increased slightly, but there’s been a drop in big-ticket purchases.
On inflation, Saraiva pointed to an ongoing concern at the Fed: the risk of inflation expectations becoming unanchored. “That completely takes away the Fed’s ability to control prices,” she warned. However, she noted that most market-based inflation measures remain stable, despite some recent volatility in sentiment surveys.
Michelle Bowman seen as a steady, regulation-light Fed candidate
Saraiva also discussed her recent reporting on Michelle Bowman, U.S. President Donald Trump’s pick for the Federal Reserve’s Vice Chair for Supervision. Bowman, currently a Fed governor, is known for her support of lighter-touch regulation and opposition to recent proposals for increased capital requirements.
“Her views are very widely known… she’s kind of aligned with the industry when it comes to [regulation],” Saraiva said.
She added that Bowman still advocates for rigorous supervision and has called for an independent review of the Silicon Valley Bank collapse.
Bowman could also be in the running to succeed Jerome Powell as Fed Chair, Saraiva added. She’s already on the board and has “proven herself to be a dedicated policymaker.”
