Fed Flags Uncertainty Amid Positive Economic Outlook

The U.S. Federal Reserve has reported that the country's economic outlook is positive, but faces heightened uncertainty due to high energy prices and the ongoing Iran war.

The Fed's 'beige book' survey of economic conditions found that economic activity nationwide increased modestly since early July, with consumer spending also growing slightly.

However, the report noted that high inflation has resulted in a great deal of price sensitivity for consumers, particularly among lower-income households, which have been reducing their spending. In contrast, higher-income households continue to show solid purchasing power.

The finding is consistent with the trend economists have dubbed the 'K-shaped' economy, where lower-income households are hit hardest by inflation while higher-income households remain relatively unaffected.