By David Pendered
President Trump’s new and proposed trade tariffs do not appear to be of concern in metro Atlanta and across the Southeast, though they are causing heartburn in other regions of the country, according to the Federal Reserve’s survey of the economy released Wednesday.
The second sentence of the national summary in the Beige Book is blunt:
- “Outlooks remained positive, but contacts in various sectors including manufacturing, agriculture, and transportation expressed concern about the newly imposed and/or proposed tariffs.”
Such was not the case in Atlanta, where the Federal Reserve Bank mentioned the word “tariff” just once in its two-page report:
- “Most firms noted that most non-labor input cost pressures were muted, though some noted increases related to the threat of tariffs.”
The Atlanta Fed’s report suggests the labor shortage that’s plagued the district is not improving. Employers in four industries said they have trouble filling jobs – information technology, long-haul transportation, construction, and medical fields.
But employers resist raising wages. Only long-haul trucking companies reported raising wages to attract and retail workers, and only in certain regions that the report did not identify.
Rather than raising salaries, employers are expanding their hunt to less-experienced workers who would be trained, to workforce development agencies and to community colleges. As they have in the past, employers said they were: “increasing the proportion of employee compensation that is not permanent and can be withdrawn, if needed (e.g., bonuses, incentives, etc.).”
The Atlanta Fed District encompasses Alabama, Florida and Georgia, and portions of Louisiana, Mississippi and Tennessee.
Nine of the nation’s 12 Fed Districts reported specific issues related to the new and imposed tariffs. The three that did not dwell on the tariffs – Atlanta, Kansas City and Dallas – characterized the tariff as a relatively distant threat.
A sampling of the other districts show concerns range from moderate to severe, which was the case in Boston.
The Federal Reserve Bank of Boston reported:
- “[T]wo contacts brought up the proposed China tariffs and said they represent a major risk. One was a toy manufacturer who sources 75 percent of their production from China. The second said that punitive tariffs on Chinese aluminum had already had a big effect: ‘Thin gauge foil’ is produced only in China and tariffs raised the price three-fold; the contact argued that ‘these tariffs are now killing high-paying American manufacturing jobs and businesses.’”
The Federal Reserve Bank of Philadelphia observed:
- “Of the 22 manufacturing firms that offered general comments, seven mentioned impacts from recent tariffs or proposed tariffs – most noted rising prices or anticipated rising prices; just one firm anticipated greater demand.”
A similar story came from the Federal Reserve Bank of Cleveland:
- “Upward pressure on input prices remained strong, particularly for commodities used by goods producers. According to contacts, recently imposed tariffs have accelerated price appreciation of steel products, in some cases at double-digit rates.”
Likewise by the Federal Reserve Bank of Richmond:
- “[S]teel and aluminum prices rose sharply and were expected to rise further as a result of recently-imposed tariffs.”
And in Chicago:
- “Steel imports spiked in anticipation of the 25 percent tariff imposed in late March. Demand for heavy machinery increased strongly, as end-user demand expanded and dealers rebuilt inventories.”