Federal Reserve Beige Book: War exacerbates uncertainty, U.S. businesses adopt a wait-and-see attitude

The Federal Reserve stated that economic activity continued to grow at a modest to slight pace in most parts of the United States as the war with Iran triggered a new wave of uncertainty and energy costs rose. In its Beige Book released Wednesday, the Fed noted that overall price increases remained moderate, but energy and fuel costs rose "significantly" in all 12 Fed districts. The Fed stated, "The Middle East conflict is seen as a major source of uncertainty, increasing complexity for businesses in hiring, pricing, and capital investment decisions, with many adopting a wait-and-see approach." The report, compiled by the New York Fed, reflects the initial impact of the war on the U.S. economy, with data up to April 6. The oil price shock triggered by the conflict pushed up gasoline prices, driving U.S. inflation to its largest increase since 2022 in March. Several Fed policymakers have signaled a preference for maintaining stable interest rates for an extended period to assess economic data.