On September 4th, two weeks ahead of the Federal Reserve policy meeting, the Fed's Beige Book arrived as scheduled.

This Beige Book covers the survey period up to August 26th, compiled by the Cleveland Fed. The report includes economic condition surveys from 12 districts across the nation, encompassing market-focused data on employment and inflation.

Regarding the overall economic situation: The report shows that in recent weeks, economic activity in most regions of the United States has remained flat or declined. The Beige Book states that three districts experienced slight growth in economic activity, while the number of districts reporting flat or declining activity increased from five in the July report to nine.

On employment: The report indicates that the employment level is generally stable, but some companies are only hiring for essential positions, reducing employee working hours and shifts, or decreasing overall staff numbers through natural attrition such as retirement or resignation. However, overall layoffs are relatively few. Wage growth is generally moderate, and non-labor costs and commodity prices have also increased, but the overall rise is kept within a slight to moderate range.

Employers have become more selective, less willing to expand their workforce, mainly due to concerns about insufficient demand and economic uncertainty. As a result, job seekers face increased difficulty in finding employment, taking longer to secure a job. With reduced competition for workers and a decrease in employee turnover, the pressure on businesses to raise wages has decreased.

On inflation: The report states that in the past few weeks, prices have risen slightly, "many areas find that freight and insurance costs continue to rise. In contrast, some areas find that cost pressures for food, lumber, and concrete have eased." However, respondents anticipate that prices and cost pressures will stabilize or further ease in the coming months.

On manufacturing activity: The report indicates that manufacturing activity has declined in most areas, with two districts pointing out that this is part of an ongoing contraction in the industry. Reports on the residential and commercial real estate market vary, but most areas show a slowdown in home sales.

On consumer activity: The report states that consumer spending has slightly decreased in most areas, while in the previous reporting period, consumer spending remained generally stable. Automobile sales vary by region, with some areas seeing an increase and others experiencing a slowdown due to high interest rates and high car prices.

On the real estate market: The report indicates that the residential construction and real estate market are mixed, but most areas report a weakening in home sales. The performance of commercial construction and real estate also varies.

As a reference for the Federal Reserve policy meeting, the Beige Book is indicative for the policy actions of the FOMC committee. On the same day, the United States also released a job vacancy report that was significantly below expectations.

Analysis suggests that the weak U.S. job market, coupled with declining inflation readings, has prompted Powell to signal in advance that the time for the Fed to cut rates has come. Currently, the market has fully priced in the Fed's rate cut at the September 17-18 meeting, with the only question being whether it will be 25 basis points or 50 basis points.

At the press conference following the Fed's last interest rate meeting, Powell praised the Beige Book and stated that he would take the survey data seriously.

As of the time of writing, according to CME's "FedWatch": The probability of the Fed cutting rates by 25 basis points in September is 55.0%, and the probability of a 50 basis point cut is 45.0%. The probability of the Fed cumulatively cutting rates by 50 basis points by November is 32.1%, by 75 basis points is 49.2%, and by 100 basis points is 18.8%.