The Federal Reserve's Beige Book Reveals Weak Economy, Only Three Regions Showing Growth

According to the Fed's Beige Book, only three out of 12 Fed regions are growing, while two are slightly growing. The Boston, Richmond, and Atlanta regions reported flat or up slightly economic activity, while the New York, Philadelphia, and Cleveland regions experienced declining activity. The Richmond region reported moderate consumer spending growth, while the Atlanta region saw steady labor markets and wages.

According to the latest Federal Reserve Beige Book, economic activity across the 12 Federal Reserve Districts was mixed, with only three regions reporting growth. The Boston, Richmond, and Atlanta regions experienced flat or slight growth, while the New York, Philadelphia, and Cleveland regions saw declining activity. The Richmond region reported moderate consumer spending growth, and the Atlanta region maintained steady labor markets and wages.

The Beige Book, released on July 7, 2025, noted that overall economic activity increased slightly from late May through early July. Five Districts reported slight or modest gains, five had flat activity, and two Districts noted modest declines. Uncertainty remained elevated, contributing to ongoing caution by businesses. Non-auto consumer spending declined in most Districts, softening slightly overall. Auto sales receded modestly on average, after consumers had rushed to buy vehicles earlier this year to avoid tariffs.

Manufacturing activity edged lower, and nonfinancial services activity was little changed on average but varied across Districts. Loan volume increased slightly in most Districts. Construction activity slowed somewhat, constrained by rising costs in some Districts. Home sales were flat or little changed in most Districts, and nonresidential real estate activity was also mostly steady. Activity in the agriculture sector remained weak. Energy sector activity declined slightly, and transportation activity was mixed.

The outlook was neutral to slightly pessimistic, with only two Districts expecting activity to increase, and others foreseeing flat or slightly weaker activity. Employment increased very slightly overall, with one District noting modest increases, six reporting slight increases, three no change, and two noting slight declines. Hiring remained generally cautious, attributed to ongoing economic and policy uncertainty. Labor availability improved for many employers, with further reductions in turnover rates and increased job applications. Wages increased modestly overall, extending recent trends.

Prices increased across Districts, with seven characterizing price growth as moderate and five characterizing it as modest. Businesses reported experiencing modest to pronounced input cost pressures related to tariffs, especially for raw materials used in manufacturing and construction. Rising insurance costs represented another widespread source of pricing pressure. Many firms passed on at least a portion of cost increases to consumers through price hikes or surcharges, although some held off raising prices because of customers' growing price sensitivity, resulting in compressed profit margins.

The Federal Reserve's Beige Book provides valuable insights into regional economic conditions. While some regions reported growth, the overall picture remains mixed, with uncertainty and caution persisting among businesses. As the economy continues to evolve, investors and financial professionals should closely monitor these trends and adjust their strategies accordingly.

References:
[1] https://www.federalreserve.gov/monetarypolicy/beigebook202507-summary.htm
[2] https://finance.yahoo.com/news/economic-activity-rebounds-concerns-over-192951026.html