Fed Beige Book Flags Inflation as Data Centers Support Growth

The Federal Reserve’s Beige Book compiles anecdotal evidence from businesses and community contacts across its 12 districts, giving policymakers a ground-level view of economic conditions before rate decisions. The latest survey underscores an increasingly uneven expansion: data-center investment is supporting manufacturing, construction and demand for skilled labor, while higher energy, transportation and raw-material costs are squeezing margins and consumer budgets.

The Fed’s September 2 report, based on information collected through August 24, showed economic activity had expanded modestly since early July. Ten districts reported slight-to-moderate growth and two reported no change, while eight recorded moderate price increases. Data-center orders and nonresidential projects remained important sources of activity, and wage gains were strongest for scarce construction and manufacturing workers. Investors are now focused on the Federal Open Market Committee’s September 15-16 meeting.