CNBC's Steve Liesman reports on news regarding the Federal Reserve.

The Federal Reserve's latest Beige Book report indicates that economic activity in the United States has changed little compared to the previous assessment. While three districts reported modest growth, five saw no change, and another five experienced slight softening. Consumer spending on retail goods declined, with high-income earners maintaining strong spending while low and middle-income households sought discounts amid higher prices and uncertainty.

Manufacturing faced challenges from higher tariffs and reduced demand, while agriculture, energy, and transportation sectors generally declined. Employment levels remained stable, but many employers reduced headcounts through layoffs and attrition, with some opting for temporary or part-time hires. Wages grew at a modest to moderate pace, but labor costs increased due to rising health insurance expenses. Inflation persisted, with input costs rising and varied pass-through of tariffs to final prices. The Federal Reserve is not currently considering a return to quantitative easing.

Economic activity little changed from previous report

Thank you. And in fact, right now, folks, we have some breaking news from the Federal Reserve. We've got the latest Beige Book. Steve, I should say, Steve Leishman has the latest Beige Book. He's looked at it, but maybe also, Steve, you can comment on what we just talked about with Rick about this idea of is there any chance the Federal Reserve does a pseudo form of QE? I'll get to that in a second. Let me get through these headlines here first, if I could, Brian. It's a kind of dour or downbeat Beige Book with the Fed saying economic activity changed little from the prior report. That prior report showed little economic activity. Three districts said there was modest growth. Five said there was no change. Five saw a slight softening. Consumer spending inched down when it came to retail goods. And there's a big difference when it comes to by income. We'll get to in a second. But electric vehicle demand was boosted by auto sales. And, of course, you know, the end of that government tax incentive that ended in September. There was a further decline in leisure and hospitality demand from international travelers. That's something we've been tracking. Spending was strong by high income earners. However, low and middle income households continue to see discounts in the face of higher prices and elevated uncertainty. That is seek discounts. Manufacturing was hit by higher tariffs and waning demand as well. Agriculture, energy and transportation all were said to be generally down. There was some improved business lending, and that became because of what you're just talking about, lower interest rates. Sentiment did improve in a few districts. Others said uncertainty was weighing down economic activity. Employment levels were stable. Labor demand was generally muted. However, most districts saw employers lower headcounts through layoffs and attrition. So that's not good news there. Some employers were hiring temporary and part time workers instead of hiring full time workers. The labor supply was said to be strained in hospitality, agriculture, construction and manufacturing, perhaps as a result of recent deportation and the immigration policies that are out there. Wages grew at a moderate pace. That's OK. Modest to moderate pace. Health insurance expenses drove up labor costs. Now, on the important issue of inflation, prices increased further with input costs increasing at a faster pace and tariff input costs increased across many districts. There was, however, a lot of difference in the pass through of tariffs to final prices. It varied with some businesses passing along, others holding the line. There was waning demand in some markets that was put that pushed prices down even further. The Fed could always increase QE, Brian. But really what we heard yesterday from the chair was part of an ongoing process where the Fed was trying to find the right level of reserves in the system. And so what was talked about yesterday was ending quantitative tightening. In other words, ending the runoff or the failure to replace those bonds that are running off of the of the Fed's balance sheet. No talk at all at this time at all, really, of changing course and going back to quantitative easing. In fact, I think, Brian, that the because of the experience from the pandemic, the bar for doing QE the next time will be quite a bit higher.

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