Most of the 12 Federal Reserve districts reported little or no change in economic activity since the prior Beige Book period.
The Federal Reserve Bank made the report in the Beige Book, fan eight-times-a-year report on economic activity.
OVERALL ECONOMIC ACTIVITY
The four districts that differed reported modest growth, the Beige Book said. Across districts, contacts reported flat to declining consumer spending because, for many households, wages were failing to keep up with rising prices.
Contacts frequently cited economic uncertainty and tariffs as negative factors, the Beige Book said.
The New York district reported that “consumers were being squeezed by rising costs of insurance, utilities and other expenses,” the Beige Book said. Contacts said the following responses to the consumer pullback.
Retail and hospitality sectors offered deals and promotions to help price-sensitive consumers stretch their dollars—supporting steady demand from domestic leisure tourists but not offsetting falling demand from international visitors, the Beige Book said.
AUTO SECTOR SEES SLIGHTLY HIGHER SALES
The auto sector noted flat to slightly higher sales, while consumer demand increased for parts and services to repair older vehicles, the Beige Book said. Manufacturing firms reported shifting to local supply chains where feasible, often using automation to cut costs.
The push to deploy Artificial Intelligence partly explains the surge of data center construction—a rare strength in commercial real estate noted by the Philadelphia, Cleveland and Chicago districts, the Beige Book said.
Atlanta and Kansas City reported that data centers had increased energy demand in their districts, the report said.
Overall, sentiment was mixed among the districts, the report said. Most firms either reported little to no change in optimism or expressed differing expectations about the direction of change from their contacts.
LABOR MARKETS
Eleven districts described little or no net change in overall employment levels, while one district described a modest decline, the report said. Seven districts noted that firms were hesitant to hire workers because of weaker demand or uncertainty.
Moreover, contacts in two districts reported an increase in layoffs, while contacts in multiple districts reported reducing headcounts through attrition — encouraged, at times, by return-to-office policies and facilitated, at times, by greater automation, including new AI tools, the Beige Book said.
In turn, most districts mentioned an increase in the number of people looking for jobs.
However, half of the districts noted that contacts reported a reduction in the availability of immigrant labor, with New York, Richmond, St. Louis and San Francisco highlighting its effect on the construction industry, the Beige Book said.
Half of the districts described modest growth in wages, while most of the others reported moderate growth. Two districts noted little or no change.
CATTLE, BEEF RECAP
The USDA reported formula and contract base prices for live FOB steers and heifers this week ranged from $242.00 per cwt to $244.80, compared with last week’s range of $239.00 to $245.20 per cwt. FOB dressed steers and heifers went for $380.55 per cwt to $382.93, compared with $373.13 to $383.79.
The USDA choice cutout Wednesday was up $2.59 per cwt at $416.01 while select was up $1.56 at $387.73. The choice/select spread widened to $28.28 from $27.25 with 63 loads of fabricated product and 21 loads of trimmings and grinds sold into the spot market.
The USDA-listed the weighted average wholesale price for fresh 90% lean beef was $432.82 per cwt, and 50% beef was $172.49.
The USDA said basis bids for corn from feeders in the Southern Plains were unchanged at $1.30 to $1.40 a bushel over the Sep corn contract, which settled at $3.97 3/4, down $0.05 1/4.
The CME Feeder Cattle Index for the seven days ended Tuesday was $365.43 per cwt, down $0.09. This compares with Wednesday’s Sep contract settlement of $362.07, down $2.17.