Key Points from the September 3, 2025 Beige Book:
Economic Activity: Economic activity was largely flat across most Districts, with four reporting modest growth. This represents a slight improvement from the previous period, though growth remained uneven.
Consumer Spending: Consumer spending stalled, with rising costs squeezing household budgets. Consumers were increasingly price-conscious, shifting toward less expensive alternatives in many regions.
Employment and Wages: Hiring was cautious, with firms hesitant to expand payrolls and some opting for layoffs through attrition. Wages rose modestly, but labour demand softened in several Districts.
Prices and Inflation: Prices and wages increased modestly, with businesses noting pressure from tariffs, which contributed to higher input costs. Some firms planned to pass these costs to consumers, raising concerns about inflation.
Sector-Specific Trends:
Manufacturing: Activity declined in most Districts, with softer orders reported.
Construction and Real Estate: Activity was flat to slightly up, though home sales softened due to uncertainty around mortgage rates and affordability issues.
Banking and Finance: Loan demand was mixed, with some Districts noting improved outlooks due to lower interest rates, while others reported steady activity.
Agriculture: Prospects for 2025 farm income were mixed, with livestock operations improving but crop operations facing challenges due to higher costs and trade uncertainties.
Economic Outlook and Uncertainty: Business sentiment was cautious, with heightened uncertainty surrounding tariffs and trade policies impacting planning and investment. Firms expressed concerns about potential cost increases and supply chain disruptions, though some remained mildly optimistic about future growth.
Regional Variations: While most Districts reported flat activity, some, like those covered by the Richmond and Atlanta Feds, noted lingering effects from natural disasters like Hurricane Helene. International tourism was a bright spot in certain areas, but overall consumer confidence was declining.