5 insights about the US economy, according to the Fed’s Beige Book

Trade policy uncertainty continues to weigh on sentiment, the report shows, even as most hard data remains strong. That disconnect sets up a tricky backdrop for the central bank before its policymaking arm meets in May.

The Fed’s third Beige Book of the year, which is based on anecdotal reports from its 12 regional banks, offers a detailed look at how that tension is playing out across the U.S. Barron’s read through all 50-plus pages to find the most telling insights the Fed will likely consider next month.

Tourism Is Slowing on Weaker International Demand

Several districts reported softening in tourism and hospitality, largely tied to a decline in international travel and stymied domestic spending.

“Large attractions that normally draw international visitors saw a drop in travelers from abroad, particularly Canada, and airports and airlines reported a notable decline in foreign passengers to the U.S.," wrote the Federal Reserve Bank of Atlanta.

A New York City hotel owner reported falling international reservations, and businesses near the Canadian border saw a similar drop in visitors, according to the Federal Reserve Bank of New York. A tourism industry expert, the report said, projected further declines in international visitors.

The Federal Reserve Bank of Boston also noted that travel from Canada had “declined noticeably," and expressed concern that negative reactions to U.S. tariff policy could limit summer travel from Europe and China.

The Federal Reserve Bank of San Francisco said immigration policy was also affecting the sector. “A large hospitality services provider plans to hire significantly fewer seasonal workers this year due to lower expected demand as well as to pause hiring work visa holders amidst policy uncertainty," officials wrote.

Federal Government Cuts Are Rippling Through Local Economies

Recent cuts to government spending and employment had widespread effects across several industries.

The Federal Reserve Bank of Dallas reported that airline demand had softened in part due to a sharp drop in federal government travel.

The Federal Reserve Bank of Philadelphia said business contacts highlighted “a drag in activity stemming from cancellations for government-related travel and conferences."

The New York Fed said an in-state furniture manufacturer saw a “significant reduction in orders, in part due to federal government spending freezes."

One area is seeing an uptick from the current policy environment: Legal services. The Federal Reserve Bank of Cleveland reported that a law firm “saw increased demand from government and nonprofit clients driven by questions on policy changes."

Food Banks Are Strained

Rising demand and reduced funding are straining food banks and pantries in multiple regions.

The Federal Reserve Bank of Kansas City reported that cuts to support for the U.S. Department of Agriculture were especially disruptive to services for seniors. Food pantries, officials said, had been forced to reduce their distributions. One such pantry, per the report, said it had to cut back the food they gave each person from three-to-five days’ worth to two days’ worth every 30 days, due to funding cuts.

Those who depend on federal funding for housing were also struggling, noted the Dallas Fed. The bank’s contacts said that landlords were “less willing to rent apartments to tenants reliant on federal funds due to the current policy climate and funding freezes."

Trade Effects Are Beginning to Filter Through Prices

Many regions described modest overall price increases, but specific industries are feeling sharper effects.

The Atlanta Fed said that dairy farmers saw demand soften “partially attributed to decreased exports of cheese to Mexico." The Federal Reserve Bank of Richmond reported that a coffee roaster reliant on imported beans saw “historic cost increases which resulted in historic price increases for their customers."

The Federal Reserve Bank of St. Louis noted that some large retailers were flat-out refusing to accept supplier price increases due to tariffs, while an HVAC supplier said they would now base pricing on shipment dates—rather than contracts or purchase orders.

According to the Federal Reserve Bank of Chicago, one retail analyst expected that most price increases would be felt in the second half of 2025, with retailers expecting to pass roughly one-third of “higher tariff costs on to consumers."

Ports Are Facing Higher Costs and Policy Risks

Concerns are also mounting at U.S. ports over proposed policy changes. The Richmond Fed said port contacts were particularly concerned about a proposed port call tax on Chinese vessels that could quadruple cargo handling costs.

Some ports also received multimillion-dollar tariff bills for Chinese cranes that had already been ordered and were en route when the new tariffs were enacted, they reported.

Write to Nicole Goodkind at nicole.goodkind@barrons.com