In a modest support of the Fed's recent hawkish pivot, the latest Beige Book released today notes that economic activity across the US improved moderately, increasing at a slight to moderate pace in eleven of twelve Federal Reserve Districts in late May and June, while one District (San Francisco) reported no change. The pace of growth was ever so slightly better than that reported back in June when activity expanded in ten Districts, was flat in one, and down in one.

Here are the big picture highlights:

• The Beige Book, which this month was prepared by the Chicago Fed, found that consumer spending edged up as higher prices, particularly for fuel, dampened sales in other categories. To that point, several Districts noted declines in spending on discretionary items or trading down to more affordable varieties.
• Tourism was up, with some Districts receiving a boost from World Cup visitors.
• Confirming that consumers are hunkering down and not splurging, auto dealers reported little change in sales, but spending on repairs grew as consumers held onto vehicles for longer.
• Agricultural conditions deteriorated due to lower commodity prices, higher input costs, and tighter credit.
• In the energy sector, oil and gas drilling increased, despite the recent drop in oil prices.
• Manufacturing production grew modestly to moderately in most Districts, led by stronger orders from the data center, machinery, and defense sectors. Manufacturers in several Districts said supply chain issues were more common.
• Construction and real estate activity increased slightly overall, with several Districts noting growth in data center building.
• Financial conditions were stable on net, and commercial and consumer loan volumes were both up modestly.
• Commercial loan quality was stable, but consumer loan quality ticked down.
• Transportation activity increased modestly amidst ongoing supply chain changes related to higher tariffs and the conflict in the Middle East.
• Overall, activity in other service industries also was up modestly, with Districts highlighting growth in health care and professional services.
• Social service providers were adjusting to funding declines while demand for basic supports—housing, food, health care—remained high.
• Contacts generally expected the economy to continue to expand in the coming months, but several Districts noted elevated uncertainty in the outlook for fuel costs.

The Beige Book next went through an analysis of Labor Markets: 

• Employment rose on balance, with five Districts showing modest, moderate, or solid gains in employment, and with seven Districts experiencing little to no change.  In the previous report, only one District had modest, moderate, or solid employment gains.
• Employment rose in a variety of industries, including manufacturing, construction, and retail.
• Skilled workers were difficult to find in a range of fields, notably technicians and tradespeople.
• Though there were reports of lower employment in a couple of Districts, the declines were small.
• Wage growth was modest to moderate in most Districts, though two saw only slight wage increases. Some wage increases were attributed to increased competition for skilled workers.
• A few Districts noted that firms had increased their usage of AI, either in the hiring and screening of potential employees or to boost worker productivity.

Prices

• Prices increased moderately overall, with nine Districts reporting moderate growth, two robust growth, and one slight growth; compared with the last reporting period, price growth was the same or slower in all Districts.
• Non-labor input costs increased for a variety of industries—including services, construction, and manufacturing—and reflected in part higher costs for energy, transportation, and raw materials.
• Some contacts tied these cost increases to the conflict in the Middle East; others mentioned tariffs.
• Consumer prices continued to rise, and a few Districts said contacts saw greater price sensitivity among their customers.
• A couple of Districts reported that selling prices grew less than input costs over the period, crimping margins.
• Expectations for price growth over the coming months varied across Districts, with contacts in some expecting inflation to continue at its current pace, while contacts in others expected inflation to slow, in part due to falling fuel prices.

Highlights by Federal Reserve District

• Boston: Economic activity expanded slightly. Employment was flat, with some isolated layoffs, and wages rose at a slight pace. Cost pressures remained elevated, but output prices increased only slightly. Consumer spending rose modestly overall, buoyed by the World Cup, but discretionary spending softened among low- and moderate-income households. The outlook improved on balance.
• New York: Economic activity increased modestly, as service sector activity picked up after a long period of weakness. Employment increased modestly, with larger firms starting to hire for growth. Input prices rose strongly under pressure from tariffs and energy costs, though selling price increases remained moderate. Businesses became more optimistic.
• Philadelphia: Economic activity rose slightly in the current period, up from a slight decrease in the last period. Nonmanufacturing activity picked up, while manufacturing activity again rose modestly. Employment again declined somewhat. Wage inflation held steady at a modest pace, and prices continued to grow moderately. Manufacturers have more widespread expectations for future growth than nonmanufacturers.
• Cleveland: Fourth District business activity increased modestly, with faster growth anticipated in the coming months. Manufacturing demand rose moderately, while retailers continued to face soft demand due to higher fuel prices. Higher fuel costs filtered through to both selling prices and wage pressures. Selling prices rose at a robust pace.
• Richmond: The regional economy expanded moderately this cycle as consumer spending continued to grow despite some shifts in consumer behavior, even among higher income consumers. Business activity was generally reported as modestly growing, and employment grew modestly as well. Manufacturing output also increased modestly while producer prices were little changed despite rising input costs. Overall price growth remained moderate.
• Atlanta: Economic activity grew modestly. Employment levels remained largely flat. Wages rose moderately, and prices increased at a moderate pace. Consumer spending expanded modestly. Residential and commercial real estate were little changed. Transportation and manufacturing rose modestly. Energy activity was stable, but agricultural conditions worsened. Lending increased at a modest pace.
• Chicago: Economic activity in the Seventh District increased modestly over the reporting period. Manufacturing demand rose moderately; employment rose modestly; consumer spending, business spending, and construction and real estate activity increased slightly; and nonbusiness contacts saw a small increase in economic activity. Prices rose moderately, wages were up modestly, and financial conditions tightened slightly. Farm income expectations for 2026 edged down.
• St. Louis: Economic activity has slightly increased. Employment was unchanged, and wage growth was moderate. Prices rose at a robust pace, and increases were widespread. The outlook remains unchanged, with contacts noting that persistent uncertainty and elevated fuel costs continue to weigh on overall conditions.
• Minneapolis: The District economy expanded slightly. Employment grew modestly, and contacts reported that labor availability increased. Wage growth was modest to moderate. Prices increased moderately, but input price pressure remained elevated. Retail contacts reported greater discretion among consumers. Services, construction, commercial real estate, and manufacturing activity increased. Agricultural conditions deteriorated.
• Kansas City: Economic activity expanded slightly within the Tenth District, which was supported by increased manufacturing activity. Inflationary pressures continued to compress profit margins, prompting firms to make pricing and investment adjustments. Contacts expect slight growth over the next six months.
• Dallas: Economic activity in the Eleventh District rose moderately. Growth picked up in the banking, energy, and service sectors but moderated in manufacturing. Retail sales improved, and the real estate sector was mixed. Employment strengthened, and wage pressures rose. Outlooks were stable to positive, though inflation, the level of demand, and geopolitical and domestic policy uncertainty remained sources of concern.
• San Francisco: Economic activity was stable but somewhat muted. Employers held head counts steady and invested further in AI. Prices increased moderately, while wages rose slightly. Retail sales and demand for services edged down. Manufacturing activity rose modestly, while agriculture activity was unchanged but weak. Conditions were steady in real estate and financial services.

More in the full Beige Book