Fed's Beige Book reports slight economic growth in some regions

The U.S. economy only expanded at a "slight to moderate" pace through mid-September, as the U.S.-China trade war continued to weigh on business activity, according to the Federal Reserve’s Beige Book.

Growth varied across all of the Fed’s 12 districts, with the Midwest and Great Plains generally more downbeat than states in the southern and western U.S, the Fed said in its region-by-region roundup of anecdotal information known as the Beige Book.

Manufacturing continued to edge lower across the board, with some districts reporting that firms had started to layoff workers as a result of the trade war. However, manufacturing activity edged up in some regions as contacts tried to retain qualified employees.

Agricultural activity also continued to deteriorate, affected by bad weather, weak commodity prices and trade disruptions.

"Business contacts mostly expect the economic expansion to continue," the report said. "however, many lowered their outlooks for growth in the coming 6 to 12 months."

What remains to be seen is whether weakness in business confidence will begin to affect consumer spending, which is responsible for a huge chunk of the country's GDP.

"Expectations continue to run high that the central bank will deliver this cycle’s third rate cut as soon as the end of October to give the expansion some added insurance," said Mark Hamrick, Bankrate's senior economic analyst. "That will provide a modest benefit through lower cost to borrowers, including those seeking to purchase a home or car. As with savers, borrowers will need to shop around to find the best rates."