US Economic Stagnation Sparks Fed Dilemma as Consumer Spending Fractures Along Class Lines

The Federal Reserve's latest Beige Book reveals an economy caught in stasis, with sharp declines in consumer spending among low- and middle-income households contrasting starkly against continued discretionary spending by high earners. This divergence has deepened existing rifts within the Fed regarding monetary policy direction.

Manufacturing sentiment showed isolated bright spots, but overall economic activity remained flat through mid-November. The Minneapolis Fed reported belt-tightening among working-class consumers while noting the wealthy remain 'unconstrained' - a pattern echoed across New York, Atlanta and Minneapolis districts.

Compounding the uncertainty, critical economic data remains unavailable following the recent government shutdown, leaving policymakers to debate December rate decisions without key October and November employment or inflation figures. Market-implied probabilities now price an 80% chance of rate cuts.