Overall consumer spending fell further in the first half of November while hiring sagged as employers looked to limit headcount, according to the Federal Reserve’s Beige Book released Wednesday afternoon.

Fed officials are looking closely for signals from this book of anecdotal evidence about the health of the economy ahead of their policy meeting in two weeks, given the delay in official government data due to the record-long government shutdown.

The combination of weaker consumption and a sagging job market could boost the odds of a December rate cut.

As layoffs have ticked up, employers are implementing hiring freezes, only replacing people who leave, and adjusting workers' hours, according to the report. A few firms noted that artificial intelligence replaced entry-level positions or made existing workers productive enough to curb new hiring.

Rising health insurance premiums are also increasing labor costs for employers.

Looking at inflation, tariffs increased costs for retailers and manufacturers. But the extent of passthrough of higher input costs to customers varied and depended on demand, competitive pressures, consumers' price sensitivity, and pushback from clients. There were multiple reports of profit margins being squeezed or firms facing financial strain from tariffs. Meanwhile, prices declined for certain materials, which firms chalked up to sluggish demand, deferred tariff implementation, or reduced tariff rates.

Looking ahead, businesses expect cost increases to continue, but plans to raise prices in the near term were mixed.

The September jobs report, released two months late, showed payroll growth rebounded from the summer with 119,000 jobs created, but the data is outdated. Officials won’t get a current reading on the job market until Dec. 16 — after their policy meeting. Inflation data is not due out until Dec. 18. Retail sales also slumped in September, according to data out this week.

Investors have increased odds for a rate cut after New York Fed president John Williams said last Friday that he still “sees room” for a rate cut in the “near term.”

Williams' comments carry added weight because he is the vice chairman of the Federal Open Market Committee and one of what’s unofficially known as the “troika,” the group of leaders at the Fed, including Fed Chair Jerome Powell and vice chair Philip Jefferson. Before his speech, traders were pricing in far lower odds of a December cut.

San Francisco Fed president Mary Daly also said this week that she supports cutting rates at the next policy meeting because she sees a sudden deterioration in the job market as both more likely and harder to manage than an inflation flare-up.

Fed Governor Chris Waller reiterated this week that he too supports a rate cut because he’s concerned about softening in the job market and expects September’s jobs report will be revised down.

On the other side, Boston Fed president Susan Collins, a voting member for December, doesn’t see a strong need to cut rates in December. Kansas City Fed president Jeff Schmid is also one who would like to hold pat, and Chicago Fed president Austan Goolsbee has expressed concern that inflation is moving in the wrong direction and is wary of "front-loading" too many rate cuts.

The Fed is set to make its interest rate decision on Dec. 10. Investors are pricing in more than an 85% chance the central bank cuts rates, up from odds as low as 30% a week ago and a few points higher than earlier Wednesday before the book's release.

Jennifer Schonberger covers the Federal Reserve, Congress, the White House, the Treasury, the SEC, the economy, cryptocurrencies, and the intersection of Washington policy with finance. Follow her on X @Jenniferisms and on Instagram.