Fed Survey Says Pervasive Uncertainty Hampers Companies’ Hiring and Growth Prospects

Perhaps the best, or most positive, finding in the Federal Reserve’s latest qualitative survey of the economy and its prospects boils down to this:

Economic activity, at least as measured in March, was mixed. In other words, things could have been worse.

But across the 12 central bank districts, the change from February to March was palpable in terms of sentiment: Uncertainty tied to tariffs and trade wars was “pervasive,” according to comments from bankers. Overall, four districts saw growth.  Three districts saw things as relatively unchanged. That left five districts with declining trends.

Spending, overall, was lower, at least for non-automobile purchases. In a demonstration of front-loading ahead of tariffs, vehicle sales gained ground.

The Federal Reserve released the third installment of this year’s Beige Book showing decreased performance on consumer spending in six of 12 districts, while only three saw an uptick. On a positive note, five districts reported improvements in the job market while three reported worse conditions.

Given the front-loading, the banks’ observations indicate that retail figures for the sector may worsen in the near term due to this substitution effect.

As recently reported by PYMNTS, motor vehicle and parts dealers performed strongly in March, growing 5.3% over the month after contractions in January (-3.4%) and February (-1.6%). Compared to March 2024, the sector experienced an 8.8% increase.

Wait and See Approach

Regarding employment, reports indicate that hiring was generally slower for consumer-facing firms than for business-to-business firms. Another symptom of the underlying uncertainty can be found in several districts reporting that firms were taking what has been described in the report as a “wait-and-see approach” to employment, pausing or slowing hiring until there is more clarity on economic conditions. Reports of upcoming layoffs remained scattered.

This generally coincides with the latest batch of government data on the topic. The most recent Jobs Openings and Labor Turnover Survey by the Bureau of Labor Statistics points toward muted but stable trend of job openings and separations, consistent with a general strategy of reducing headcount by attrition rather than layoffs.

A rather lackluster performance in the job market can soon become a deterrent to consumer spending. A recent survey run by the New York Fed shows that just 54.8% of respondents were satisfied with their wage at their current job in March 2025, down from 55.9% in November 2024 and 55.6% in March 2024.

This means that nearly half of consumers find their current compensation insufficient or incompatible with their professional proficiency. The share of respondents satisfied with prospects for advancement at current job also fell in March, to 48.7% from 50.4% in the November run.

Reports from multiple economic outlets, like the Conference Board, point toward depressed consumer sentiment as a key limitation to the economy operating at its full potential, inducing downward adjustment to economic projections. We may not be in the recession zone — but connecting the dots shows that many observers anticipating disappointing economic growth.