A man walks to work on Wall Street, near the New York Stock Exchange, in New York. Photo: IC

 
 
The US economy expanded "modestly" from October through mid-November while retailers reported higher costs resulting from tariffs, according to a Federal Reserve survey released on Wednesday.

"Most Districts reported stable to moderately growing consumer spending, and increases in auto sales and tourism were seen across several Districts," said the Fed in its latest survey on economic conditions, known as the Beige Book, based on information collected from its 12 regional reserve banks.

"In manufacturing, more Districts reported an expansion in the current period than the previous one, though the majority continued to experience no growth," the survey said.

The survey also showed that retailers reported higher costs from tariffs and firms generally expected higher prices going forward.

"Firms' ability to raise prices to cover higher costs remained limited, though a few Districts noted that companies affected by the tariffs were more inclined to pass on cost increases," the survey said.

In the Cleveland Fed district, a clothing retailer reduced the use of price discounting to offset higher costs resulting from tariffs. By contrast, a food retailer said that while tariffs had increased costs, the company "cannot raise prices on a whim" because of fierce competition.

Business contacts in the Chicago Fed district reported that retail prices "increased modestly" and they expected prices to "rise at a somewhat faster pace" over the next 12 months.

"One contact said that food, home goods, and apparel retailers were struggling to pass on higher costs; in contrast, another contact noted that retailers continued to raise prices to reflect higher potential and realized tariffs," the survey showed.

In the Richmond Fed district, several retailers also reported that tariffs were raising costs and hurting profit margins, according to the survey.

U.S. consumers and businesses paid an additional 38 billion US dollars in tariffs from February 2018 to September 2019 due to US-China trade disputes, according to Tariffs Hurt the Heartland, a US anti-tariff advocacy group.

"Economists, analysts and experts across the board agree the tariffs are hurting the economy," Jonathan Gold, a spokesperson for Americans for Free Trade, which is a coalition of US businesses, trade organizations and workers against tariffs, said in a statement earlier this month.

"The manufacturing industry slowed for the third month in a row in October; farm bankruptcies are on the rise; and business investment contracted for the second quarter in a row," Gold said, urging the US government to reach a final deal with China that "removes all tariffs."