Evelyn Reynolds

President Donald Trump’s tariffs are pushing inflation generally higher as companies are caught between absorbing the costs or passing them onto customers, according to a Fed report.
The central bank’s periodic Beige Book report categorized overall economic growth as having “changed little” since the last report Sept. 3.
The release comes amid a dearth of relevant economic data due to a government shutdown entering its third week.

Shoppers in Walnut Creek, California, US, on Tuesday, Oct. 7, 2025.
David Paul Morris | Bloomberg | Getty Images

President Donald Trump’s tariffs are pushing inflation generally higher as companies are caught between absorbing the costs or passing them onto customers, according to a Federal Reserve report Wednesday.
The central bank’s periodic Beige Book report, published eight times a year generally at about six-week intervals, categorized overall economic growth as having “changed little” since the last report on Sept. 3. Labor markets “were largely stable” as demand was “muted” for most of the Fed’s 12 districts.

When it came to prices, though, Trump’s duties implemented in April and then staggered through ensuing months showed an impact.
“Prices rose further during the reporting period,” the report stated. “Tariff-induced input cost increases were reported across many Districts, but the extent of those higher costs passing through to final prices varied.”
In some cases, firms held prices unchanged to stay competitive and to appease inflation-sensitive clients. However, some businesses said they were “fully passing higher import costs along to their customers.”
A few districts reported that slowing demand actually pushed prices down for materials.
The trade war has escalated in recent days as China has ordered restrictions on coveted rare earths materials, while Trump has retaliated with a threat of 100% tariffs on Chinese imports.

The release comes amid a dearth of relevant economic data due to a government shutdown entering its third week. Key providers such as the Labor and Commerce departments are largely closed due to the impasse.
However, Bureau of Labor Statistics workers have been called back to release the pivotal consumer price index report used both as an inflation gauge and to index cost of living adjustments for Social Security recipients. The CPI reading, which normally would have been released Wednesday, will come out Oct. 24, the last inflation reading the Fed will get before its policy meeting Oct. 28-29.
The Beige Book said consumer spending nudged lower in recent weeks, though it noted “strong” spending on luxury items and travel by upper-income earners. Lower and medium earners, meanwhile, pursued discounts and promotions.
Future expectations improved in some districts, though Philadelphia reported caution over a prolonged government shutdown. More

JPMorgan data shows how Americans in different income brackets perceive the economy.
An analyst said the data shows a “notable bifurcation” between income groups.

Shoppers look at fruit for sale at Frank’s Quality Produce Co. at Pike Place Market in Seattle, Washington, US, on Wednesday, May 28, 2025.
M. Scott Brauer | Bloomberg | Getty Images

Americans have vastly different views of the economy — and the divergence is being driven in part by income bracket, data shows.
Higher-income consumers were more likely to report stronger economic confidence readings when asked to consider the next year given changes since the presidential election, according to JPMorgan’s Cost of Living Survey.

This release adds to a growing body of qualitative and quantitative evidence showing the U.S. economy is in a “K-shape,” a term used by economists to describe the deviation in economic experiences by income. In other words, it can explain why well-off Americans are continuing to spend while lower earners buckle under inflationary pressures.
“Survey results indicated a notable bifurcation,” JPMorgan’s Matthew Boss, a widely followed and respected consumer analyst, wrote in a Tuesday note to clients.

High-income respondents rated their confidence a 6.2 out of 10 — with 10 being the best — on average. More than half of this cohort chose a rating between 7 and 10, underscoring their rosy financial outlook.
On the other hand, low-income consumers reported a 4.4 score on average. Less than a quarter of participants in this category provided a score between 7 and 10, which Boss pointed out creates a 30-point delta between these groups.
Across income brackets, the average respondent rated their confidence at a 4.9 out of 10 rating.

This income-based division was once again prevalent when consumers were asked about their confidence for covering monthly bills compared with six to 12 months ago.
Nearly 6 of 10 high-income consumers said these bills were easier or becoming easier to cover. But just 37% and 30% of middle- and lower-income groups, respectively, said the same.
Higher-income respondents were also more likely to say they were planning to increase spending on nonessential items over the next year than other brackets, according to JPMorgan’s survey.
JPMorgan isn’t the only organization seeing a disparity between income classes when it comes to their economic outlook.
The top one-third of earners have reported an average consumer sentiment rating that’s around 25% higher than the lowest one-third over the last two years, according to the University of Michigan’s monthly consumer survey.

The Michigan survey’s most recent results reflect interviews conducted July 29-Aug. 25 of a statistically representative sample of about 1,000 American households. More

Federal Reserve Chair Jerome Powell said the central bank is nearing a point where it will stop reducing the size of its bond holdings, but gave no long-run indication of where interest rates are heading.
Though balance sheet questions are in the weeds for monetary policy, they matter to financial markets.
Powell generally stuck to the recent script on the economy and interest rates that policymakers are concerned that the labor market is tightening and skewing the balance of risks between employment and inflation.

Jerome Powell, chairman of the US Federal Reserve, during a news conference following a Federal Open Market Committee (FOMC) meeting in Washington, DC, US, on Wednesday, Sept. 17, 2025.
Kent Nishimura | Bloomberg | Getty Images

Federal Reserve Chair Jerome Powell on Tuesday suggested the central bank is nearing a point where it will stop reducing the size of its bond holdings, and provided a few hints that more interest rate cuts are in the cards.
Speaking to the National Association for Business Economics conference in Philadelphia, Powell provided a dissertation on where the Fed stands with “quantitative tightening,” or the effort to reduce the more than $6 trillion of securities it holds on its balance sheet.

While he provided no specific date of when the program will cease, he said there are indications the Fed is nearing its goal of “ample” reserves available for banks.
“Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserve conditions,” Powell said in prepared remarks. “We may approach that point in coming months, and we are closely monitoring a wide range of indicators to inform this decision.”
On interest rates, the central bank chief did not provide specific guidance on a path lower, but comments about weakness in the labor market indicated that easing is firmly on the table, as financial markets expect.
“If we move too quickly, then we may leave the inflation job unfinished and have to come back later and finish it. If we move too slowly, there may be unnecessary losses, painful losses, in the employment market. So we’re in the difficult situation of balancing those two things,” he said.
“The data we got right after the July meeting showed that … that the labor market has actually softened pretty considerably, and puts us in a situation where the two risks are closer to being in balance,” Powell added.

Other Fed officials have said recently that the falling labor market is taking precedence in their thinking, leading to the likelihood of additional rate cuts ahead.

Balance sheet math

Powell, though, centered most of his speech on the Fed’s holdings of Treasurys and mortgage-backed securities.
Though balance sheet questions are in the weeds for monetary policy, they matter to financial markets.
When financial conditions are tight, the Fed aims for “abundant” reserves so that banks have access to liquidity and can keep the economy running. As conditions change, the Fed aims for “ample” reserves, a step down that prevents too much capital from sloshing around the system.
During the Covid pandemic, the central bank had aggressively purchased Treasurys and mortgage-backed securities, swelling the balance sheet to close to $9 trillion.
Since mid-2022, the Fed has been gradually allowing maturing proceeds of those securities to roll off the balance sheet, effectively tightening one leg of monetary policy. The question had been how far the Fed needed to go, and Powell’s comments indicate that the end is close.
He noted that “some signs have begun to emerge that liquidity conditions are gradually tightening” and could be signaling that reducing reserves further would hinder growth. However, he also said the Fed has no plans to go back to its pre-Covid balance sheet size, which was closer to $4 trillion.
On a related matter, Powell noted concerns over the Fed continuing to pay interest on bank reserves.
The Fed normally remits interest it earns from its holdings to the Treasury general fund. However, because it had to raise interest rates so quickly to control inflation, it has seen operating losses. Congressional leaders such as Sen. Ted Cruz, R-Texas, have suggested terminating the payments on reserves.
However, Powell said that would be a mistake and would hinder the Fed’s ability to carry out policy.
“While our net interest income has temporarily been negative due to the rapid rise in policy rates to control inflation, this is highly unusual. Our net income will soon turn positive again, as it typically has been throughout our history,” he said. “If our ability to pay interest on reserves and other liabilities were eliminated, the Fed would lose control over rates.”

Views on the economy

On the larger issue of interest rates, Powell generally stuck to the recent script, namely that policymakers are concerned that the labor market is tightening and skewing the balance of risks between employment and inflation.
“While the unemployment rate remained low through August, payroll gains have slowed sharply, likely in part due to a decline in labor force growth due to lower immigration and labor force participation,” he said. “In this less dynamic and somewhat softer labor market, the downside risks to employment appear to have risen.”
Powell noted that the Federal Open Market Committee responded in September to the situation with a quarter percentage point reduction on the federal funds rate. While markets strongly expect two more cuts this year, and several Fed officials recently have endorsed that view, Powell was noncommittal.
“There is no risk-free path for policy as we navigate the tension between our employment and inflation goals,” he said.
The Fed has been hampered somewhat by the government shutdown and the impact it has had on economic data releases. Policymakers rely on metrics like the nonfarm payrolls report, retail sales and various price indexes to make their decisions.
Powell said the Fed is continuing to analyze conditions based on the data that is available.
“Based on the data that we do have, it is fair to say that the outlook for employment and inflation does not appear to have changed much since our September meeting four weeks ago,” Powell said. “Data available prior to the shutdown, however, show that growth in economic activity may be on a somewhat firmer trajectory than expected.”
The Bureau of Labor Statistics has said it has called workers back to prepare the monthly consumer price index report, which will be released next week.
Powell said available data has showed that goods prices have increased, largely a function of tariffs rather than underlying inflation pressures. More

Treasury Secretary Scott Bessent accused China of trying to weaken the global economy by slapping export controls on resources vital for technology.
“If they want to slow down the global economy, they will be hurt the most,” he said in an interview with the Financial Times.

U.S. Treasury Secretary Scott Bessent speaks to the press, on the day of U.S.-China talks on trade, economic and national security issues, in Madrid, Spain, September 15, 2025.
Violeta Santos Moura | Reuters

Treasury Secretary Scott Bessent accused China of trying to weaken the global economy by slapping export controls on resources vital for technology.
In an interview with the Financial Times, Bessent said the moves over rare earths and minerals are an attempt by China “to pull everyone else down with them.”

“If they want to slow down the global economy, they will be hurt the most,” he said.
The move by China comes just ahead of a scheduled meeting between President Donald Trump and China’s Xi Jinping.
In an Oct. 9 announcement Beijing said it won’t allow the export of rare earths materials for military use, the first time it has targeted that specific use. The U.S. uses rare earths magnets for many of its most important weapons systems such as the F-35 warplane, Tomahawk missiles and smart bombs.
Trump has responded with 100% tariffs on Chinese goods starting Nov. 1 and has threatened to cancel the meeting with Xi. Markets have been volatile since the dispute escalated, with Wall Street stock averages down sharply to start the day Tuesday.
“They are in the middle of a recession/depression, and they are trying to export their way out of it. The problem is they’re exacerbating their standing in the world,” Bessent told the FT. More

The Labor Department will bring back staff to work on the consumer price index.
The department had originally paused work on the CPI report due to its shutdown plan.

A large US flag is seen on the facade of the Department of Labor headquarters building in Washington DC, United States on September 8, 2025.
Celal Gunes | Anadolu | Getty Images

The Labor Department will bring back staff to work on a key consumer inflation report despite the ongoing federal government shutdown, CNBC has learned.
The department’s Bureau of Labor Statistics will “promptly resume” work on September’s consumer price index data, a White House official said. The report will come out at 8:30 a.m. ET on Oct. 24, nine days after it was originally scheduled, according to the BLS.

The department had originally paused work on the CPI report – which tracks a broad basket of goods and services for price changes over time — because of its shutdown plan, the official said. But the Social Security Administration needs third-quarter CPI data for calculating and publishing annual cost-of-living adjustments before Nov. 1.
Other BLS data releases including the nonfarm payroll report haven’t been published as originally intended since the federal government shutdown due to a lapse in funding. The Senate on Thursday failed to pass funding bills for the seventh time that would have ended the closure, which began last week.
Bloomberg News first reported that the BLS was calling employees back to work on the CPI data.
— CNBC’s Steve Liesman contributed to this report.
Correction: The Social Security Administration needs third-quarter CPI data for calculating and publishing annual cost-of-living adjustments before Nov. 1. An earlier version misstated the organization’s name. More

Global trade volume growth in 2025 is expected to hit 2.4%, up sharply from a previous estimate.
For 2026, however, the organization slashed its previous expectation of 1.8% trade volume growth to a lackluster 0.5%.
“Trade growth is expected to slow in 2026 as the global economy cools and as the full impact of higher tariffs is finally felt for a full year,” the WTO said.

A cargo ship sits outside of the Port of Elizabeth marine terminal seen from Bayonne, New Jersey, U.S., April 9 2025.
Shannon Stapleton | Reuters

The World Trade Organization on Tuesday hiked its forecast for global trade growth in 2025 but warned that the outlook for 2026 had deteriorated.
In its latest “Global Trade Outlook and Statistics” report published on Tuesday, the WTO predicted that trade volume growth in 2025 would stand at 2.4%, up sharply from a previous estimate of 0.9% in the trade body’s August report.

The outlook for next year is not so rosy, however, with the organization slashing its previous expectation of 1.8% trade volume growth next year to a lackluster 0.5%.
“Trade growth is expected to slow in 2026 as the global economy cools and as the full impact of higher tariffs is finally felt for a full year,” the WTO said.
Trade tariffs have become a dominant feature, and headwind, for global commerce since U.S. President Donald Trump shocked friends and foes alike with his widescale tariffs regime in April.
Countries scrambled to reach trade deals with the White House but even allies, such as the U.K., have seen a baseline 10% tariff remain on goods exported to the U.S.

Front-loading imports

Global trade volumes rose sharply in the first half of 2025 — up 4.9% year-on-year — with several factors contributing to the robust expansion.

These included the front-loading of imports into the U.S. in anticipation of higher trade tariffs, and favorable macroeconomic conditions with disinflation, supportive fiscal policies and tight labor markets boosting real incomes and spending in major economies, the WTO said.
Strong growth in emerging markets and increased demand for AI-related goods — including semiconductors, servers, and telecommunications equipment — also fueled global trade growth, it added, with AI-related spending driving nearly half of the overall trade expansion in the first half of the year, rising 20% year-on-year in value terms.
Global competition when it comes to developing AI-related products has heated up with both the U.S. and Asia looking to dominate the sector.
The WTO noted that the U.S. accounted for roughly one-fifth of global AI-related trade growth in the first half of 2025. The bulk of the expansion came from Asia, however, which accounted for nearly two-thirds of global AI-related trade growth in the same time period.
Major economies are racing to develop their artificial intelligence capabilities, with both the U.S. and China looking to dominate the sector. The WTO noted that the U.S. accounted for roughly one-fifth of global AI-related trade growth in the first half of 2025. The bulk of the expansion came from Asia, however, which accounted for nearly two-thirds of global AI-related trade growth over the same time period.
“Trade growth spanned the digital value chain, from raw silicon and specialty gases to devices powering cloud platforms and AI applications,” the WTO said in its report, noting that “Asia’s export performance was strong in AI-related products, consistent with the worldwide surge in investment in this sector.”
A key downside risk to the latest forecast is the spread of trade-restrictive measures and policy uncertainty to more economies and sectors, WTO economists noted. On the upside, they said sustained growth in trade for AI-related goods and services could provide a medium-term boost to global trade.
Global services exports growth is expected to slow from 6.8% in 2024 to 4.6% in 2025 and 4.4% in 2026. Although not directly subject to tariffs, services trade can be affected indirectly though links to goods trade and output.

Sharp slowdown

Looking ahead, possible signs of weakness in trade and manufacturing output had already been observed in developed economies, including reduced business and consumer confidence and slower growth in employment and incomes, the WTO noted.

Commenting on the organization’s latest outlook, Director-General Ngozi Okonjo-Iweala said “countries’ measured response to tariff changes in general, the growth potential of AI, as well as increased trade among the rest of the world — particularly among emerging economies — helped ease trade setbacks in 2025.”
“Trade resilience in 2025 is thanks in no small part to the stability provided by the rules-based multilateral trading system. Yet complacency is not an option.” she added.
“Today’s disruptions to the global trade system are a call to action for nations to reimagine trade and together lay a stronger foundation that delivers greater prosperity for people everywhere,” Okonjo-Iweala said. More

Employment growth was essentially flat in September, according to data from investment giant Carlyle that seeks to fill in data gaps created by the government shutdown.
To be sure, while Carlyle’s data showed anemic payroll gains, other indicators painted a brighter picture. The firm said underlying GDP growth was running at 2.7% annualized pace

Job seekers attend the Mega JobNewsUSA South Florida Job Fair held in the Amerant Bank Arena on September 25, 2025 in Sunrise, Florida.
Joe Raedle | Getty Images

Employment growth was essentially flat in September, according to data from investment giant Carlyle that seeks to fill in data gaps created by the government shutdown.
The firm said its proprietary data showed job growth of just 17,000 from the month, which would be even less than the 22,000 gain in August reflected in Bureau of Labor Statistics data.

With the BLS shuttered and data releases suspended until the impasse between congressional Republicans and Democrats is resolved, Wall Street firms are rushing to provide alternative measures to paint a picture of where the U.S. economy is heading.
Carlyle’s data jibes somewhat with other releases showing little hiring growth.
Last week, payrolls processing firm ADP reported that a loss of 32,000 jobs in the private sector, though that included a reduction stemming from adjustments to BLS revisions.
Outplacement firm Challenger, Gray & Christmas also reported last week that while layoffs declined in September, the level of planned hiring for firms hit its lowest since 2009, when the economy was still feeling the impact from the global financial crisis.
To be sure, while Carlyle’s data showed anemic payroll gains, other economic indicators painted a brighter picture.

The firm said underlying gross domestic product growth was running at 2.7% annualized pace in September while business investment accelerated 4.8% on a three-month average annual rate. Carlyle also reported that consumer prices for energy declined 3.8% while services excluding shelter, a key Federal Reserve data point, rose 3.3%.
Carlyle said it derived its data from its “expansive global portfolio” that includes 277 companies, 694 real estate investments and 730,000 employees.
Though the firm saw weaker employment data, Goldman Sachs recently said its “underlying job growth” tracker indicated a gain of 80,000 positions in September. Goldman also reported that the labor market is loosening, meaning there are more workers than jobs, to levels not seen in 10 years. More