Economic outlook deteriorates in Mountain West
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Washington and its neighbors are seeing slower economic growth, more layoffs, and rising costs as the West braces for a downturn, per the latest Federal Reserve's Beige Book report.
Why it matters: The region's long-standing affordability crisis could deepen as inflation lingers, layoffs rise, and housing production slows.
State of play: The San Francisco Fed — which oversees nine Western states, including Washington — reported that economic activity in the region slowed slightly from mid-February through March.
- Employment dipped as businesses across industries, including Big Tech, announced layoffs or paused hiring, per the Beige Book.
- Retailers saw sluggish sales, especially in discretionary categories like clothing and electronics.
- Prices rose modestly, with elevated pressure on imported goods and raw materials like aluminum, steel and electrical components.
Between the lines: Service costs — including insurance, health care and utilities — remained high, even as some hospitality businesses cut prices to attract customers.
- Many companies received price hike notices from suppliers tied to new or expected tariff increases.
- Additionally some retailers and hospitality providers in southern California and northern Washington "reported a material drop in cross-border tourism with Canada and Mexico," the report stated.
Zoom in: Despite ongoing demand, real estate activity remained muted across the region, according to the report.
- Developers paused or scaled back projects due to rising construction costs and elevated financing rates.
- Some landlords reported a rise in missed rent payments as tenants struggled with high living costs.
- That will likely pose a challenge to Washington and Seattle as they look to boost housing production and office building use.
Context: The Fed publishes the Beige Book eight times a year to give a snapshot of current economic conditions across its 12 districts, providing indicators for what to expect in coming months.
- The report is compiled by gathering information from businesses, community organizations and other sources across each district.
What they're saying: "Most contacts reported that they plan to pass increased input costs on to customers, but some expected to absorb cost increases to preserve market share," the Beige Book states.
What to watch: Demand for community support services like housing and food assistance remained high even as service providers struggled with "deteriorating conditions," the report warns.
- Funding from public and private sector sources dropped due to federal policy changes and companies' reduction in discretionary and philanthropic spending.
- Some nonprofits had to cut programs and lay off workers as a result. That means local governments might have to shoulder a larger financial burden.
Go deeper: U.S. tariffs drag global growth