Federal Reserve Beige Book: Economy Expanding Moderately, Data Center Demand Becomes Main Driver

Zhitong Finance APP has learned that the latest Beige Book survey report released by the Federal Reserve shows that U.S. economic activity has experienced moderate growth over the past two months, with particularly strong demand from data centers standing out as a major driver of the economy. The report, compiled by the Minneapolis Fed based on information collected by the twelve Federal Reserve Banks across the country as of August 24, indicates that although different industries have varying views on energy prices and geopolitical uncertainties, the overall economic outlook remains "positive".

The report shows that spending on high-end consumer goods has been robust, but consumer price sensitivity has increased. Manufacturing activity in most Fed districts achieved growth, driven by defense orders and data center–related demand. U.S. employment numbers saw a slight increase, with the strongest demand for labor seen in manufacturing, construction, and some service sectors, while labor demand in retail and hospitality sectors declined.

On prices, most districts experienced moderate acceleration in price increases. The report specifically mentions that some consumer-facing businesses noted customers are increasingly sensitive to prices, which limits their ability to pass upstream cost increases on to end consumers.

Notably, this report mentions "artificial intelligence" 19 times and "data center" 25 times, highlighting the significant support that technology infrastructure investment is currently providing to the U.S. economy.

Federal Reserve officials kept interest rates unchanged at their July meeting but expressed growing concern about whether inflation could return to the 2% target without higher interest rates. Last week, Federal Reserve Chairman Kevin Walsh warned at the annual central bank symposium in Jackson Hole, Wyoming that if inflation remains persistent, the Fed may need to take further action.