Beige Book: Most districts report modest economic growth

Overview 

Activity increased slightly to moderately for eight out of 12 districts. Three districts reported no changes, and one reported a decline. Automotive sales were mostly flat. Residential real estate softened. Nonfinancial services reported steady to slightly increasing activity. Consumer spending led by higher-income households grew moderately, but lower-income households remained price sensitive.  

Employment was unchanged across the districts. Most reported no net hiring, and that firms increased their use of temporary workers to remain flexible. Any hiring was likely backfilling rather than new role creation. District contacts reported skilled labor shortages in engineering, health care, and trades.

Overall, fewer workers are switching jobs. Firms reported exploring AI for productivity gains and future workforce planning. Wages grew moderately at normal levels. 

Price pressures persisted, with ten districts reporting moderate increases and two districts reporting only slight lifts. Tariffs remain a widespread cost pressure, while rising insurance and energy expenses crimp margins. Businesses increasingly report passing through the costs in their selling prices. However, the retail and restaurant industries remain reluctant to increase prices due to consumer cost sensitivity. 

Districts with growing economic activity 

In Boston, high-end goods and services activities were the predominant factors associated with an increase in consumer spending. Employment and wages were flat, and prices edged up. A drop in home sales failed to depress the district’s overall economic activity for the period; outlook turned slightly optimistic. 

Philadelphia reported that its activity rebounded from its modest decline to experiencing slight growth. Employment rose modestly, while wage growth eased price increases that have been squeezing low- and middle- income households. 

In Cleveland, business activity grew and is expected to continue to increase slightly. Manufacturing and construction segments reported confidence despite lingering uncertainty. Nonlabor cost pressures are strong, selling prices are increasing, and consumer spending decreased modestly.  

Richmond reported modest growth in retail, travel, and tourism activity as spending rose modestly. Auto sales declined, manufacturing activity fell slightly, residential real estate slowed modestly, but commercial real estate picked up slightly. Employment activity was unchanged, while prices increased, and wages grew.  

Retail sales improved slightly, travel rose modestly, home sales improved, and manufacturing was flat to slightly up in Atlanta. The district reported that commercial real estate activity decreased, transportation and employment were flat to slightly down, and energy demand remained flat. Prices grew slightly.  

St. Louis saw a modest increase in activity since its previous report. The district credits the government’s reopening and strong holiday sales to the uptick. Employment levels remained flat, and prices rose moderately.  

Stronger service‑sector sales and manufacturing orders were the predominant economic activities driving upticks in Kansas City’s reported growth. Energy activity decreased as prices hovered at unprofitable levels. Agriculture activities were mixed due to weakened crop profitability being offset by strong cattle prices. Prices increased modestly due to higher input and labor costs, while the labor market remained stable and balanced. 

San Francisco reported a moderate expansion in its economic activity. High-income households led strong holiday spending, which caused retail sales activity to increase modestly. The district said steady employment and a slight increase in wages were present alongside net stable services, real estate, and agricultural activities. Lending activity ticked up. Manufacturing softened, and prices accelerated from modest to moderate growth.  

Districts with no-change in economic activity 

The seventh district of Chicago reported little net change since the last period. Employment was flat, and wages were up modestly. Non-business contacts reported no change as overall business spending fell slightly, including manufacturing’s modest activity decline. Decreased activities were offset by slight increases in consumer spending, construction, and real estate. Financial conditions loosened modestly, net farm income for 2025 was on par with 2024, and prices rose moderately.  

Dallas reported steady activity overall. Banking activity increased as loan volumes rose for the six weeks since the last reporting. Manufacturing, retail, nonfinancial services, and real estate activities showed little change. Employment activity remained flat as prices increased. The district reported a cautious outlook due to demand concerns and tariff-driven inflation.   

Minneapolis reported that its economic activity remained flat. Despite winter weather conditions, consumer spending for the holidays, supported by seasonal travel, drove the modest increase. Manufacturing activity contracted, prices rose slightly, and employment activity was down as firms reduced headcount before then adding more staff.  

New York reports declining economic activity 

Employment fell slightly as layoffs in the district continue to increase at major employers. Simultaneously, wage growth remained moderate. Price increases accelerated at a modest pace while consumer spending from higher-income households rose due to holiday spending. Businesses expect little improvement in near-term employment activity, but by comparison, manufacturers are more optimistic.