Search Results
Discussion Paper
How Might Fifth District Firms React to Changing Tariff Policies?
In March 2025, the U.S. implemented a 20 percent tariff on all imports from China and an additional 25 percent tariff on all steel and aluminum imports. The administration has also announced additional 25 percent tariffs on goods imported from Canada and Mexico to be implemented in April 2025 and proposed a set of tariffs targeting the European Union and automotive imports.In order to better understand how these implemented and proposed tariffs might affect firms in the Fifth District, we included questions about the impact of tariffs in our March business survey, which was fielded from Feb. ...
Discussion Paper
What Do Softened Business Expectations Mean for Hiring?
n October, we saw a downturn in our Fifth District indexes for expected demand and business conditions over the next six months, especially in the service sector. Employment expectations over the same period, however, remained largely unchanged. This month, firms' six-month expectations for demand and business conditions remained soft, and near-term employment expectations remained steady.Every November, we ask firms for their employment outlook over a longer time horizon: the next 12 months. Longer-run employment expectations also appeared to remain positive. Compared to last year, a similar ...
Briefing
Tariffs: Estimating the Economic Impact of the 2025 Measures and Proposals
Tariffs are taxes imposed by a government on imported goods, typically calculated as a percentage of the import's value (known as an ad valorem tax). Governments use tariffs for various purposes, such as raising revenue, protecting domestic industries from foreign competition and influencing international trade patterns. By increasing the cost of imported products, tariffs encourage consumers to shift toward domestically produced goods, thus supporting local businesses and potentially stimulating domestic economic activity.However, the overall impact of tariffs depends critically on how much ...
Briefing
Tariff Update: Incorporating the April 9 Announcements
This article updates our previous analysis covering the potential effects of announced tariffs by the U.S. As the analysis is quite similar to our previous analysis, much of the text of the article is drawn from the previous article.In our April 2 article examining recent tariff announcements, we constructed a benchmark measure of the average effective tariff rate (AETR) based on detailed trade data for 2024. The analysis quantified the fiscal and trade effects of newly proposed tariffs through a series of counterfactual scenarios. These included tariffs on aluminum and steel, renewed duties ...
Discussion Paper
Fifth District Firms and the Prospect of Higher Input Prices
Since the middle of 2023, firms' year-ahead input price growth expectations have been relatively steady, hovering around 3 percent for manufacturers and between 4 to 5 percent for service providers. However, recent developments in trade and tariff policy have introduced new uncertainty into firms' decision-making. In December, our surveys showed little evidence that this uncertainty had made its way into firms' price or cost growth expectations. Data from our February surveys show a slight uptick in firms' expected growth in the prices they pay their suppliers.In addition to the slight uptick ...
Discussion Paper
Inflation Expectations of Fifth District Firms
In early 2021, inflation in the U.S. began to climb, with the Consumer Price Index (CPI) peaking at 9 percent on a year-over-year basis in 2022. Since then, inflation has come down considerably. In July 2021, we started to monitor the inflation expectations of respondents to our Fifth District business surveys. We saw expectations rise along with inflation and then start to fall.In the most recent April survey, we find that most firms are following inflation. Firms' expectations for CPI growth in the next year and the next five years have increased again to levels similar to October 2023. ...
Discussion Paper
The Impact of Tariffs on Our Region's Firms
Given recent changes in U.S. tariff policy, we asked Fifth District firms how they expected to be affected by tariff policy in March. At the time, 80 percent of respondent businesses expected to be impacted. In our May surveys, we checked in with firms and found that 72 percent of respondents made business changes in response to tariffs on imports. Firms reported taking a variety of actions. Of the firms that reported making adjustments, most have or plan to increase prices, 47 percent have canceled or delayed capital expenditures, and 41 percent have adjusted hiring plans.
Discussion Paper
Are Customers Pulling Back on Spending? Evidence From the Richmond Fed Business Surveys
In the last few years, consumer spending in the United States has been remarkably resilient. In our August business survey, we sought to understand if Fifth District firms have recently experienced softening demand for their goods or services. A majority of firms reported that over the past three months, customers decreased the amount of goods and services purchased — both in quantity and in dollar amount. The survey also found that demand has softened more for manufacturers and retailers than firms in other industries. Additionally, firms reported that lower-income customers pulled back on ...
Discussion Paper
Are Capital Expenditures Getting Too Expensive?
Capital expenditure (CapEx) is business spending used to acquire, improve, and maintain physical assets, such as buildings and machinery. These projects often require extensive planning because once in motion, they tend to be expensive, drawn out, and costly to stop. As such, a firm's willingness to undertake capital expenditures can be indicative of its future economic outlook. For example, a retail business may be less likely to invest in opening a new storefront if it's pessimistic about future demand for its product. In our monthly Fifth District surveys, we regularly ask firms if they ...
Discussion Paper
The Fifth District Labor Market: Normalization or the Beginning of a Slowdown?
The U.S. labor market continues to surprise economists and forecasters with its resilience. In 2023, employers have added more than 300,000 jobs per month on average, and that's after adding around 500,000 jobs per month on average throughout 2021 and 2022. The unemployment rate is persistently low, and the job postings rate remains extremely high. There are, however, some signs of slowing. In addition to job postings falling from its peak, the pace of job and wage growth has slowed.Reports from employers in the Fifth Federal Reserve District have been similarly strong, but with signs of ...