Fed’s beige book: Economic activity increased slightly from late May through early July

• Economic activity increased slightly from late May through early July.

• The outlook was neutral to slightly pessimistic, as only two districts expected activity to increase and others foresaw flat or slightly weaker activity.

• This report was prepared at the Federal Reserve Bank of Boston based on information collected on or before July 7, 2025.

• Prices increased across districts, with seven characterizing price growth as moderate and five characterizing it as modest, mostly similar to the previous report.

Below is a summary of the economic activity, the labor market, prices, in the district highlights as presented by the Boston Fed in the July beige book.

Overall Economic Activity

• Economic activity increased slightly from late May through early July.

• 5 Districts reported slight/modest gains; 5 were flat; 2 reported modest declines.

• Conditions improved compared to the previous report, where half of Districts reported declines.

• Business uncertainty remained elevated, causing continued caution.

• Consumer spending (non-auto) declined in most districts; auto sales fell modestly after earlier tariff-driven purchases.

• Tourism was mixed; manufacturing edged lower; nonfinancial services were steady but varied.

• Loan volumes rose slightly in most Districts.

• Construction slowed, partly due to rising costs; home and nonresidential sales were mostly flat.

• Agriculture remained weak; energy declined slightly; transportation was mixed.

• Outlook: Neutral to slightly pessimistic, with only 2 Districts expecting growth.

Labor Markets

• Employment increased slightly overall.

  • 1 District saw modest gains, 6 saw slight increases, 3 unchanged, 2 slight declines.

• Hiring remained cautious due to economic and policy uncertainty.

• Labor availability improved; turnover fell and job applications rose.

• Skilled trade shortages and reduced foreign-born labor were noted.

• Some firms increased automation and AI investment to reduce hiring needs.

• Wage growth was modest overall, ranging from flat to moderate.

• Layoffs were limited, slightly more common in manufacturing.

• Firms are postponing major hiring/layoff decisions until uncertainty improves.

Prices

• Prices increased across all Districts.

  • 7 described price growth as moderate, 5 as modest—similar to last report.

• Tariffs caused input cost pressures, especially in manufacturing and construction.

• Insurance costs also a widespread concern.

• Many firms passed some costs to consumers, though price sensitivity limited pricing power.

• Profit margins compressed where price hikes couldn’t keep pace.

• Most businesses expect elevated cost pressures to persist into late summer.

District Highlights

Boston

• Flat to slightly up; retail and tourism declined.

• Modest price increases, except for tariff-driven cases.

• Home sales up modestly; cautious hiring amid guarded optimism.

New York

• Modest decline in activity; uncertainty curbing decisions.

• Slight job growth, modest wage and price increases.

• Input costs spiked due to tariffs.

Philadelphia

• Modest business decline overall.

• Nonmanufacturing weakened, manufacturing edged up.

• Slight declines in employment and modest price gains.

Cleveland

• Flat activity, with slight improvement expected.

• Weaker manufacturing and transportation demand.

• Strong cost growth but modest selling price increases.

Richmond

• Moderate growth; retail, leisure, and hospitality improved.

• Manufacturing declined due to rising prices hurting demand.

• Modest job and price growth.

Atlanta

• Little change overall.

• Steady labor and wages; moderate price growth.

• Travel up, consumer spending and real estate down.

Chicago

• Slight economic growth; modest job and wage increases.

• Manufacturing declined; prices rose moderately.

• Farm income expectations unchanged.

St. Louis

• Activity and employment flat; moderate price increases.

• Contacts expect continued nonlabor cost pressures from tariffs.

• Outlook slightly pessimistic.

Minneapolis

• Flat activity; slight employment growth.

• Moderate wages, easing price pressures.

• Consumer spending down; tourism up; construction and energy fell.

Kansas City

• Mostly unchanged activity; some pickup in consumer and financial activity.

• Labor availability improved, easing wage pressure.

• Moderate price growth.

Dallas

• Slight growth; nonfinancial services up, manufacturing steady.

• Retail and housing down; oil production flat.

• Loan volumes rose; employment unchanged.

San Francisco

• Stable conditions; slight drop in employment.

• Modest wage and price growth; retail up slightly.

• Weaker manufacturing and residential real estate.

This article was written by Greg Michalowski at www.forexlive.com.