Investor Anatomy

Federal Reserve Beige Book — Executive Summary

Beige Book Summary: November 2025

National Backdrop

Economic activity remained largely unchanged since the previous report, with two Federal Reserve Districts noting a modest decline and one reporting modest growth (1). Overall consumer spending continued to decline, although higher-end retail spending demonstrated resilience (2). Manufacturing activity saw a modest increase, contrasting with earlier challenges, though tariffs and related uncertainty persist as headwinds (3). Revenues in the nonfinancial services sector were mostly flat to down, and conditions in the agriculture and energy sectors were largely stable (4)(5)(6). Outlooks for future economic growth were largely unchanged overall, with some contacts expressing optimism, particularly among manufacturers, while others noted an increased risk of slower activity (7).

Labour Market Conditions

Employment levels declined slightly across the nation, with roughly half of the Districts reporting weaker labor demand (8). Firms generally restricted headcounts through hiring freezes, replacement-only hiring, and attrition, although there was an uptick in layoff announcements in some areas (9). Worker availability improved across most Districts, yet specific skilled positions and a reduced supply of immigrant workers continued to pose hiring difficulties (10). Artificial intelligence (AI) adoption was noted by some firms as replacing entry-level roles or increasing productivity, thereby curbing new hiring needs (11). Wage growth remained modest overall, with some sectors experiencing more moderate pressure due to persistent labor tightness and rising health insurance premiums contributing to higher labor costs (12).

Prices & Cost Pressures

Prices rose moderately during the reporting period, with the pace of increases easing slightly but remaining elevated compared to the prior period (13). Input cost pressures were widespread, driven significantly by tariff-induced increases in manufacturing and retail, alongside rising costs for insurance, utilities, technology, and healthcare (14). Pricing power varied, with multiple reports of margin compression as firms faced competitive pressures and consumer price sensitivity (15). Some firms passed higher import costs to customers, particularly in mid to high-end markets, while others absorbed costs or offered discounts to maintain market share (16). Prices for certain materials, such as steel and lumber, declined in some Districts due to sluggish demand, while upward cost pressures are largely anticipated to persist, though near-term plans to raise prices are mixed (17).

Sector Themes

Consumer activity: Consumer spending declined further, with resilience observed in higher-end retail but increased caution and price sensitivity among lower- and middle-income consumers (2). The expiration of federal tax credits contributed to declines in EV sales, and government shutdowns negatively impacted some consumer purchases (18)(19).
Manufacturing: Manufacturing activity increased somewhat nationally, a pickup from a more varied and challenging prior period (3). Demand was notably boosted by AI data center construction in some regions, though tariffs and trade policy uncertainty remained significant headwinds impacting new orders and production planning (20).
Services: Nonfinancial services revenues were mostly flat to down, with some sectors experiencing steep declines (e.g., information in New York) while professional and business services saw moderate growth, partly due to tax policy changes (4)(21). Travel and tourism activity was mixed but generally flat to slightly down, with cautious discretionary spending.
Housing & construction: Residential real estate activity eased slightly in several Districts due to high mortgage rates and limited supply, with home sales varying and some price declines noted in greater Boston (22). Commercial real estate conditions improved marginally overall, with office markets recovering in some areas and strong demand for data centers driving construction (23).
Banking & credit: Loan demand was mixed, with an overall decline in business loans and commercial mortgages, but a slight increase in residential mortgage demand, often linked to declining interest rates (24). Credit standards tightened for business loans and commercial mortgages, while consumer delinquencies improved for most loan types but remained elevated (25).
Agriculture & energy: Conditions in these sectors were largely stable (5)(6). Challenges stemmed from a low-price environment for oil and some crops, with concerns over trade policy volatility. Energy demand for primary sources remained strong, particularly for LNG, solar, and wind, driven by data center activity.

Regional Dispersion

Stronger districts: The Chicago District experienced slight growth across most sectors including manufacturing, consumer spending, and construction (26). Boston reported slight expansion, led by renewed strength in home sales and modest manufacturing sales growth (27). Cleveland saw slight increases in business activity, with moderate demand growth in professional and business services and a boost to manufacturing from AI data centers (28).
Softer districts: New York reported a modest decline in economic activity and employment, with consumer spending slightly down (29). Philadelphia experienced modest declines across most sectors, exacerbated by a government shutdown (30). Kansas City and Dallas both saw slight weakening in economic activity, cooling consumer activity, and declining employment (31)(32). Minneapolis reported flat activity overall, with slight declines in employment and consumer spending, and weak agricultural conditions (33). St. Louis economic activity and employment remained unchanged, noting a slowdown in demand and a pessimistic outlook amplified by the government shutdown (34).
Common constraints: Widespread concerns over tariffs and trade policy uncertainty impacted manufacturing and consumer sentiment across many Districts (35). Rising input costs, particularly for insurance and healthcare, were a common challenge (14). Labor shortages for skilled positions and challenges related to immigration policies were noted in several Districts (36). Cautious discretionary spending, particularly by lower- and middle-income consumers, was a recurring theme (37).
Outliers: The Philadelphia and St. Louis Districts explicitly cited the federal government shutdown as a significant disruptor to economic activity and demand (30)(34). New York experienced resilient higher-end retail spending despite overall declines, and Dallas noted specific challenges for healthcare hiring due to high H-1B visa fees (29)(32).

Signals to Watch

Growth risks: Ongoing uncertainty regarding trade policy and tariffs, the impact of federal government shutdowns on various sectors, and persistent softening in consumer demand, especially among lower- and middle-income households, pose downside risks to future growth (38).
Labour inflections: The increasing adoption of AI leading to replacement of entry-level jobs and improved worker productivity, continued reliance on attrition over layoffs, and persistent difficulties in filling skilled positions despite overall easier hiring conditions indicate evolving labor market dynamics (11).
Inflation persistence: Continued widespread input cost pressures from tariffs, rising insurance, healthcare, and utility expenses, and firms' intentions to implement future price increases suggest underlying inflationary persistence, although consumer price sensitivity and competitive pressures may limit pass-through (39).
Capital investment: Mixed signals, with some pickup in capital expenditures linked to AI infrastructure and lower interest rates, but sustained caution from businesses due to economic uncertainty and tariffs, suggests a bifurcated investment environment (40).
Financial stress: The steady rise in consumer delinquencies, particular struggles faced by small businesses and nonprofits regarding funding and increasing costs, and continued tightening of credit standards by banks are early indicators of potential financial stress (41).