Beige Book

The Beige Book

Summary of Commentary on

Current Economic Conditions by

Federal Reserve District

April 2025

FEDERAL RESERVE SYSTEM

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Contents

About This Publication .................................................................................................... ii

National Summary ........................................................................................................... 1

Federal Reserve Bank of Boston .................................................................................. 5

Federal Reserve Bank of New York .............................................................................. 9

Federal Reserve Bank of Philadelphia ....................................................................... 13

Federal Reserve Bank of Cleveland ............................................................................ 17

Federal Reserve Bank of Richmond ........................................................................... 21

Federal Reserve Bank of Atlanta ................................................................................ 25

Federal Reserve Bank of Chicago .............................................................................. 29

Federal Reserve Bank of St. Louis ............................................................................. 32

Federal Reserve Bank of Minneapolis ....................................................................... 36

Federal Reserve Bank of Kansas City ........................................................................ 40

Federal Reserve Bank of Dallas .................................................................................. 44

Federal Reserve Bank of San Francisco .................................................................... 48

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About This Publication

What is the Beige Book?

The Beige Book is a Federal Reserve System publication about current economic conditions

across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety of mostly qualitative information, gathered directly from each District’s

sources. Reports are published eight times per year.

What is the purpose of the Beige Book?

The Beige Book is intended to characterize the change in economic conditions since the last

report. Outreach for the Beige Book is one of many ways the Federal Reserve System engages

with businesses and other organizations about economic developments in their communities.

Because this information is collected from a wide range of contacts through a variety of formal

and informal methods, the Beige Book can complement other forms of regional information gathering. The Beige Book is not a commentary on the views of Federal Reserve officials.

How is the information collected?

Each Federal Reserve Bank gathers information on current economic conditions in its District

through reports from Bank and Branch directors, plus interviews and online questionnaires completed by businesses, community organizations, economists, market experts, and other sources.

Contacts are not selected at random; rather, Banks strive to curate a diverse set of sources that

can provide accurate and objective information about a broad range of economic activities. The

Beige Book serves as a regular summary of this information for the public.

How is the information used?

The information from contacts supplements the data and analysis used by Federal Reserve economists and staff to assess economic conditions in the Federal Reserve Districts. The qualitative

nature of the Beige Book creates an opportunity to characterize dynamics and identify emerging

trends in the economy that may not be readily apparent in the available economic data. This inforNote: The Federal Reserve officially identifies Districts by number and Reserve Bank city. In the 12th District, the Seattle

Branch serves Alaska, and the San Francisco Bank serves Hawaii. The System serves commonwealths and territories as

follows: the New York Bank serves the Commonwealth of Puerto Rico and the U.S. Virgin Islands; the San Francisco Bank

serves American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. The Board of Governors revised

the branch boundaries of the System in February 1996.

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The Beige Book

mation enables comparison of economic conditions in different parts of the country, which can be

helpful for assessing the outlook for the national economy.

The Beige Book does not have the type of information I’m looking

for. What other information is available?

The Federal Reserve System conducts a wide array of recurring surveys of businesses, households, and community organizations. A list of statistical releases compiled by the Federal Reserve

Board is available here, links to each of the Federal Reserve Banks are available here, and a summary of the System’s community outreach is available here. In addition, Fed Listens events have

been held around the country to hear about how monetary policy affects peoples’ daily lives and

livelihoods. The System also relies on a variety of advisory councils—whose members are drawn

from a wide array of businesses, non-profit organizations, and community groups—to hear diverse

perspectives on the economy in carrying out its responsibilities.

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National Summary

Overall Economic Activity

Economic activity was little changed since the previous report, but uncertainty around international

trade policy was pervasive across reports. Just five Districts saw slight growth, three Districts

noted activity was relatively unchanged, and the remaining four Districts reported slight to modest

declines. Non-auto consumer spending was lower overall; however, most Districts saw moderate to

robust sales of vehicles and of some nondurables, generally attributed to a rush to purchase

ahead of tariff-related price increases. Both leisure and business travel were down, on balance,

and several Districts noted a decline in international visitors. Home sales rose somewhat, and

many Districts continued to note low inventory levels. Commercial real estate (CRE) activity

expanded slightly as multifamily propped up the industrial and office sectors. Loan demand was

flat to modestly higher, on net. Several Districts saw a deterioration in demand for non-financial

services. Transportation activity expanded modestly, on balance. Manufacturing was mixed, but

two-thirds of Districts said activity was little changed or had declined. The energy sector experienced modest growth. Agricultural conditions were fairly stable across multiple Districts. Cuts to

federal grants and subsidies along with declines in philanthropic donations caused gaps in services provided by many community organizations. The outlook in several Districts worsened considerably as economic uncertainty, particularly surrounding tariffs, rose.

Labor Markets

Employment was little changed to up slightly in most Districts, with one District reporting a modest

increase, four reporting a slight increase, four reporting no change, and three reporting a slight decline.

This is a slight deterioration from the previous report with a few more Districts reporting declines. Hiring

was generally slower for consumer-facing firms than for business-to-business firms. The most notable

declines in headcount were in government roles or roles at organizations receiving government funding.

Several Districts reported that firms were taking a wait-and-see approach to employment, pausing or

slowing hiring until there is more clarity on economic conditions. In addition, there were scattered

reports of firms preparing for layoffs. Most Districts and markets reported an improvement in overall

labor availability, although there were some reports of constraints on labor supply resulting from shifting

immigration policies in certain sectors and regions. Wages generally grew at a modest pace, as wage

growth slowed from the previous report in multiple Districts.

Note: This report was prepared at the Federal Reserve Bank of Atlanta based on information collected on or before

April 14, 2025. This document summarizes comments received from contacts outside the Federal Reserve System and is

not a commentary on the views of Federal Reserve officials.

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The Beige Book

Prices

Prices increased across Districts, with six characterizing price growth as modest and six characterizing

it as moderate, similar to the previous report. Most Districts noted that firms expected elevated input

cost growth resulting from tariffs. Many firms have already received notices from suppliers that costs

would be increasing. Firms reported adding tariff surcharges or shortening pricing horizons to account

for uncertain trade policy. Most businesses expected to pass through additional costs to customers.

However, there were reports about margin compression amid increased costs, as demand remained

tepid in some sectors, especially for consumer-facing firms.

Highlights by Federal Reserve District

Boston

Economic activity increased slightly, as the outlook became more pessimistic on tariff-related concerns. Prices rose modestly, but contacts perceived new upside risks to inflation. Employment

edged up, although hiring plans became more cautious in response to increased uncertainty. IT

services contacts experienced strong revenue growth and were expected to be relatively unaffected by tariffs.

New York

Economic activity contracted modestly as heightened uncertainty weighed on businesses and consumers. Employment was steady to up slightly. Price increases picked up to the higher end of the

moderate range. Businesses expressed significant concern about tariffs. Outlooks darkened, with

many businesses anticipating declining activity and rising prices.

Philadelphia

Business activity declined modestly during the current Beige Book period after a slight decrease in

the last period. Nonmanufacturing activity fell moderately. Employment declined slightly; wages

and prices again grew modestly. Generally, sentiment fell, and firms grew less optimistic about

future growth amid rising economic uncertainty.

Cleveland

Reports suggested that Fourth District business activity continued to be flat in recent weeks, and

contacts expected activity to remain flat in the months ahead. Consumer spending declined,

though some auto dealers noted customers pulling forward purchases ahead of potential tariffs.

Employment levels increased slightly, and wage pressures remained moderate.

National Summary

Richmond

The regional economy grew slightly in recent weeks despite some pockets of weakness tied to federal staffing and contract spending. Consumer spending was flat. Residential and commercial real

estate activity picked up slightly. Non-financial service providers reported a modest decline in

demand and hesitation from customers to make investment decisions. Employment was little

changed and price growth remained moderate amid upward price pressures from tariffs.

Atlanta

The Sixth District economy grew slightly. Employment was flat. Wages, nonlabor costs, and firms’

prices increased modestly. Retail sales fell slightly, and travel and tourism declined modestly.

Home sales rose modestly. Commercial real estate conditions softened. Transportation activity

grew slowly. Loan growth was moderate. Manufacturing declined. Energy activity rose slowly.

Chicago

Economic activity was little changed. Consumer spending increased modestly; employment and

construction and real estate activity were up slightly; manufacturing was flat; business spending

declined slightly; and nonbusiness contacts saw a slight decline in activity. Prices increased modestly, wages rose slightly, and financial conditions tightened. Prospects for 2025 farm income

were unchanged.

St. Louis

Economic activity has remained unchanged, but the outlook has slightly deteriorated. Heavy rains

negatively impacted neighborhoods, farms, and businesses. Contacts expressed a lot of uncertainty and an elevated effort in estimating the impact of tariffs and ways to reduce cost increases

and supply disruptions.

Minneapolis

District economic activity was lower. Employment declined and labor demand continued to soften.

Wage growth was modest, and price increases were moderate. Consumer spending was lower with

some exceptions. Manufacturing experienced modest improvements. Construction activity fell

overall. Commercial real estate was mostly unchanged, and home sales declined. Agricultural conditions remained weak.

Kansas City

Economic activity in the Tenth District grew slightly, but expectations about business activity and

consumer spending weakened considerably. Amid shifting conditions, businesses indicated they

were most likely to adjust pricing to adapt. Expectations of price growth rose at a robust rate,

most pronounced in goods sectors. Employment levels were stable but hiring stalled.

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Dallas

Growth in the Eleventh District economy slowed to a slight pace. Nonfinancial services activity

stalled. Retail sales dipped while manufacturing and oil field activity rose modestly. Lending

growth moderated. Commercial real estate activity was steady, while housing demand remained

tepid. Employment increased, and input cost pressures accelerated. Outlooks deteriorated as

heightened uncertainty surrounding domestic and trade policy hindered firms’ ability to plan.

San Francisco

Economic activity slowed slightly. Employment fell slightly. Wages grew slightly, and prices rose

modestly. Demand for business and consumer services and for retail goods weakened. Activity in

manufacturing and residential and commercial real estate markets softened slightly. Lending

activity and conditions in agriculture were stable. The economic outlook worsened materially.

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Federal Reserve Bank of

Boston

Summary of Economic Activity

Economic activity increased slightly, about the same as in the previous report. Concerns over the

impact of tariffs intensified but mainly affected the outlook. Prices rose modestly in recent weeks

on average, despite larger increases in selected input prices. Employment edged up, but many

firms planned to pause or limit hiring going forward because of policy uncertainty. IT services firms

reported strong revenue growth. Revenues, led by moderate growth in auto sales, increased

slightly for retailers but were flat for manufacturers. In the tourism sector, overall revenues rose

slightly, but tourism from Canada slowed considerably. Commercial real estate activity picked up

slightly in recent weeks. Home sales softened a bit from one year earlier, partly reflecting bad

weather. The outlook became considerably more uncertain and more pessimistic, as contacts

emphasized risks of rising inflation and weakening demand linked to tariffs and other federal

policies.

Labor Markets

Employment increased slightly, and wages rose at a modest pace. Headcounts increased modestly for IT services firms, which mostly sought to fill technical support and software development

roles. Among manufacturers, hiring activity was mixed, and employment increased slightly on

average. Retail and tourism employment was roughly unchanged, although contacts reported

increased ease of hiring and slower attrition. In contrast, immigrant labor supply, specifically of

health care workers, declined noticeably on Cape Cod. Wages increased modestly on average.

Concerning the outlook, a few firms expected to engage in moderate hiring activity in the coming

months but most planned to limit or even pause hiring because of elevated uncertainty and/or

weak demand. No significant layoffs were planned.

Prices

Prices rose modestly on average, but contacts said that prices could start to rise more rapidly in

the coming months. IT services prices rose at a slight pace over the quarter, and hotel room rates

in the Greater Boston area increased modestly on a year-over-year basis. Retail prices were

roughly flat in recent months, including those of autos. On a year-over-year basis, wholesale seafood prices declined moderately, while prices of certain metals imported from China increased

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sharply. Prices for energy and production tools increased moderately over the quarter. Manufacturers posted only slight output price increases in the most recent quarter. Looking ahead, retail

and manufacturing contacts alike cautioned that cost increases linked to tariffs, although still to

be determined, could result in significant passthrough to their output prices. Expected passthrough rates were substantial, with half of manufacturers projecting a complete passthrough,

mostly without lags. One manufacturer shortened the duration of its price quotes to 30 days in

anticipation of the need to adjust prices rapidly.

Retail and Tourism

First District retail and tourism contacts reported mixed results in recent months, with revenues

increasing slightly on balance. Excluding automobiles, retail sales weakened moderately in the

first quarter of 2025 compared with the fourth quarter of 2024, falling short of expectations. Auto

dealers in New Hampshire reported moderate sales increases throughout March and early April,

and winter sales of snowmobiles and plows in the state were quite strong. Cape Cod restaurant

owners experienced a first-quarter slowdown, and hotel bookings on the Cape for summer were

running somewhat below recent years. Airline passenger traffic through Boston increased moderately year-over-year. Hotel occupancy in greater Boston increased modestly, boosted by two international sporting events. However, travel from Canada declined noticeably, and contacts feared

that summer travel from Europe and China could suffer as well because of negative reactions to

U.S. tariff policies. More broadly, tourism contacts expressed concerns that declining consumer

confidence could hurt leisure spending. The retail outlook also turned decidedly more pessimistic,

though the outlook for convention activity remained solid.

Manufacturing and Related Services

Relative to the previous quarter, manufacturing sales were flat on average, although reports varied

across contacts and even within firms across business lines. A frozen food manufacturer experienced healthy growth in retail sales despite the growing weakness in food services demand. A

materials producer reported a pronounced drop in sales over the quarter to automotive industry

clients but said that demand from other sources increased modestly from a year earlier. Capital

spending stayed within firms’ forecasts, increasing modestly from a year earlier. Projects included

a new production facility and upgrades to automation and productivity. Several contacts expressed

concerns that tariffs might require them to raise output prices and/or absorb cost increases. Consequently, the outlook turned more pessimistic and uncertain, with some firms marking down their

revenue growth forecasts and others perceiving greater downside risks for the economy in general.

Federal Reserve Bank of Boston

IT and Software Services

IT contacts in the First District reported strong revenue growth, driven in part by acquisition

activity, although one firm said that real transactions volume was about level with a year earlier. IT

contacts expected no direct impacts from tariffs and cautioned that it was too early to tell how tariffs would affect their clients. Capital spending continued to drift downward. Contacts expected

demand for their services to stay strong or improve further in the second quarter, based on the

strength of recent bookings and confidence in their business models. One firm forecasted growing

demand for its automation products. However, one contact expressed increased pessimism for the

economy as a whole, and another pointed to downside risks to client demand associated with

cuts to federal research funding.

Commercial Real Estate

Commercial real estate activity in the First District picked up slightly on balance, but contacts

emphasized that uncertainty had put a damper on decision-making. Vacancy rates and rents were

largely unchanged, and office leasing activity increased a bit. Life sciences buildings in greater

Boston, already facing high vacancy rates, saw demand slow further from expected cuts to

research funding and an ongoing pullback of private equity. Several office buildings in Boston and

Providence were reportedly headed for auctions as their debt matured. At the same time, financing

flowed more freely to certain (non-office) properties, owing to an increased interest from private

debt funds. The outlook was marked by uncertainty, stemming mostly from tariffs, and became

slightly more pessimistic. Contacts were concerned that tariffs could blunt construction activity,

raise energy costs, and dampen demand for warehouse space, adding that just the uncertainty

surrounding tariffs was having a chilling effect on economic activity. One contact noted, however,

that the onshoring of manufacturing could yield offsetting benefits. Most respondents expected

demand for multifamily housing and grocery-anchored retail to remain strong but held mixed opinions regarding the outlook for office and industrial properties.

Residential Real Estate

Across the First District, home sales declined slightly in February and March compared with twelve

months earlier. Those results contrasted with strong year-over-year sales increases recorded for

January, as several contacts perceived that inclement weather held back activity relative to seasonal norms. On the brighter side, pending sales rose by moderate to large margins from one year

earlier in Massachusetts, New Hampshire, and Maine, and inventories increased considerably in

most reporting states, except for Massachusetts where inventories declined moderately. Home

prices increased at a moderate pace from one year earlier, less rapidly than in the previous report,

with Massachusetts’ home prices declining slightly in recent months. Contacts were hopeful that

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spring would bring a robust seasonal upswing in sales but cautioned that inventories remained a

limiting factor.

For more information about District economic conditions visit: https://www.bostonfed.org/in-theregion.aspx.

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Federal Reserve Bank of

New York

Summary of Economic Activity

Economic activity in the Second District contracted modestly as heightened uncertainty weighed

on businesses and consumers. Still, employment in the region was steady to up slightly and

wages grew moderately. Price increases picked up to the higher end of the moderate range. Manufacturing activity declined modestly. Consumer spending was up modestly in March, though there

were signs of a pullback in early April. Housing markets picked up slightly. Many businesses

expressed significant concerns that tariffs would reduce supply availability, push up input prices,

decrease demand, squeeze profit margins, and hold back investment. Outlooks darkened, with

many businesses anticipating declining activity and rising prices in the months ahead.

Labor Markets

On balance, employment in the region was steady to up slightly. Businesses in personal services,

information, transportation, and wholesale saw an increase in headcounts, while retailers, leisure

and hospitality establishments, and business services firms reported declines.

Demand for workers held steady, though some employers reported pausing hiring amid heightened

uncertainty. A New York City area recruiter noted that despite some hesitation, demand for

workers in the financial services industry was steady. Contacts at employment agencies in the

region reported that labor demand and labor supply remained roughly in balance, though it has

generally become easier to find workers. Still, some businesses with more specialized needs continued to struggle to find workers with the right skills. Though there were no mentions of major layoffs, there were scattered signs of headcount reductions at smaller companies.

Wage growth remained moderate. A New Jersey salon reported that training costs were high

because workers did not have the proper vocational training, while a New York contact indicated

minimum wage increases were hindering hiring of new workers.

Prices

Both selling price and input price increases picked up to the higher end of the moderate range.

Food and insurance costs rose noticeably, and price increases for some wholesale and construc-

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tion materials—such as steel, aluminum, and imported doors—accelerated. Some manufacturers

and distributors have begun adding surcharges to account for tariffs on shipments already en

route. Still, a regional coffee roaster noted some easing in the price of commodity coffee. Firms

dependent on imports expressed concerns about compressed margins and their ability to pass on

cost increases to consumers. Contacts anticipated strong increases in input prices in the coming

months and expected selling price increases to remain moderate.

Consumer Spending

Consumer spending was up modestly in March, though there were signs of a pullback in early

April. Department store contacts reported a small pickup in March on the heels of weak sales

amid poor weather in the previous reporting period, but saw signs of weakening consumption in

April. A variety of smaller retailers in all corners of District—including food stores, restaurants,

and home furnishings stores—reported recent declines in sales, and a diner in upstate New York

noted customers were spending less on higher-priced menu items. By contrast, auto dealers in

upstate New York reported strong sales in March as customers looked to purchase vehicles

before tariffs pushed prices up further. Used car sales were steady, though dealers anticipated a

pickup in demand as tariffs raise the prices of new cars.

Manufacturing and Distribution

Manufacturing activity declined modestly, with new orders and shipments edging lower. A regional

furniture manufacturer reported a significant reduction in orders, in part due to federal government

spending freezes, and a handful of manufacturers reported sharp declines in sales to Canada. By

contrast, activity among wholesale and distribution-related firms increased slightly. A shipping

industry contact indicated that there was strong demand since the last report, with a significant

pulling forward of imports in anticipation of tariffs and other policy changes. Delivery times were

unchanged, and supply availability declined slightly but it is expected to worsen considerably in the

coming months. Some manufacturers paused capital equipment purchases amid economic uncertainty. Manufacturers turned pessimistic about the outlook.

Services

Activity in the service sector declined moderately. There were particularly sharp declines reported

by firms in the leisure and hospitality, business services, and information sectors, while contacts

from the education and health and personal services sectors reported more modest declines. A

mid-sized IT service firm noted the loss of several contracts with Canadian companies. The outlook for service sector firms worsened noticeably, with contacts anticipating a sharp decline in

activity in the coming months. Service sector firms reported a major pullback in planned

investment.

Federal Reserve Bank of New York

Tourism activity in New York City was steady, with solid ticket sales at Broadway theatres. Hotel

rates and occupancy rose slightly compared to the same time last year. However, a New York City

hotel owner reported a falloff in international reservations, and contacts in upstate New York near

the border saw declining visits from Canadians. Looking ahead, a tourism industry expert anticipated further declines in international visitors.

Real Estate and Construction

The housing market picked up slightly as the spring selling season got underway. Supply remained

the limiting factor, with ongoing exceptionally low inventory in upstate New York and the New York

City suburbs, particularly Long Island. There was a small increase in new listings in recent

months, and some new construction added to inventory in upstate New York. Demand remained

solid and picked up for the spring selling season, pushing prices higher, and bidding wars continued. New York City’s housing market remained solid, despite some pullback from high-income

buyers rattled by financial market volatility. Yet, a New York City real estate contact expressed concern that with mortgage rates rising in recent weeks, buyers and sellers may retreat to the

sidelines.

Rents have stabilized at a high level in upstate New York, while rents in New York City continued to

rise. With mortgage rates edging higher and heightened uncertainty, potential buyers have pushed

up demand for rentals.

Commercial real estate markets held steady. Vacancy rates in Manhattan’s office market have

declined, and leasing activity was stronger in March. Still, asking rents continued to decline, as

the ongoing preference for newer, higher-quality property has shifted the balance of space on the

market. Midtown Manhattan has fared better than other business districts, as proximity to transit

remained attractive. Northern New Jersey’s industrial market softened, as some activity stalled

due to the uncertainty about tariffs and consumer demand. Construction activity declined, amid

rising material prices and heightened uncertainty.

Banking and Finance

Activity in the broad finance sector continued to weaken modestly this reporting period. Small-tomedium-sized banks reported that demand edged down for business loans and commercial mortgages, but declined more sharply for consumer loans and residential mortgages, as well as refinances. A senior loan officer at a regional bank in New York noted that uncertainty was tempering

loan demand. Most contacts reported that credit standards had eased, while delinquency rates

improved. Deposit rates continued to decline.

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Community Perspectives

Reductions in federal grants and subsidies have led to gaps in services and financial assistance

to community members, with organizations having difficulty obtaining financing to help fill these

gaps. Local food banks that rely on federal funding have reported reductions in personnel and programs. Contacts at non-profits and other community-based organizations expressed significant

concern about the future of federal funding and services support, creating challenges in staffing,

strategy, and planning.

For more information about District economic conditions visit: https://www.newyorkfed.org/

regional-economy.

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Federal Reserve Bank of

Philadelphia

Summary of Economic Activity

Business activity in the Third District declined modestly after falling slightly in the prior period.

Nonmanufacturing activity decreased moderately after a slight decline last period. Nonauto

retailers reported little change to a slight decline, with discounts helping to keep customer traffic

steady. Auto dealers reported a strong increase in sales thanks to a pulling forward of demand to

beat tariff-related price increases. Employment declined slightly, with demand for workers below

year-ago levels. Manufacturing activity continued to grow modestly. Wages and prices also continued to rise modestly, albeit at slightly lower rates. Firms continued to note that changes in trade

policies pose upside risks to general inflation. Firms expect a modest decline in business activity

over the next six months, with rising economic uncertainty weighing on prospects. Nonmanufacturers expected a moderate decline in activity over the next six months, and manufacturers

expected slight growth—both lower than last period’s expectations.

Labor Markets

Employment appeared to decline slightly, following a slight increase in the prior period. Based on

our March survey, full-time employment fell modestly for nonmanufacturing firms, the first decline

since August. The index for part-time employment also fell. However, the index for total manufacturing employment moved higher in March. The average workweek index rose for all firms. More

than two-thirds of all firms reported no changes in full-time employment in March, roughly in line

with the prior period.

Overall, our staffing contacts reported demand for workers was mostly flat from the prior period

but was below year-ago levels. One staffing contact highlighted a recent decline in overtime being

offered as well as instances of employers telling temporary workers not to come in for a few days

because of a lack of work, something the contact had not heard since before the pandemic. Contacts reported a slight increase in labor supply but noted a decline in already employed persons

looking for a new job.

Business contacts continued to report low employee turnover and little issue hiring workers. One

contact remarked the firm had recently received applications from several overqualified candidates. Another contact reported that clients were viewing federal government layoffs as an oppor-

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tunity to hire highly qualified workers who would not otherwise be available. However, reports of

fewer hours, hiring freezes, and layoffs were more common than in recent periods.

Wage inflation continued to ease further on balance, but firms still reported modest increases.

Across industries, contacts reported little upward wage pressure, with wage increases typical of

their long-run average.

Prices

On balance, firms’ prices again rose modestly during the period. In our monthly surveys, the diffusion index for prices paid rose and was above its nonrecession average for both nonmanufacturers

and manufacturers. The diffusion index for prices received rose for nonmanufacturing firms, while

the index ticked down for manufacturing firms but remained elevated.

One contact reported canceling upcoming price increases, fearing a drop in customer demand.

Meanwhile, another contact reported that a significant number of restaurants chose not to participate in an annual local restaurant week promotion because they couldn’t afford to discount their

menu items.

Most contacts expected tariffs to increase costs and prices moving forward, and only a few

reported an impact this period. The indexes for future prices paid and future prices received continued to suggest that manufacturing firms expect price increases over the next six months. Both

indexes moved lower but remained above their historical nonrecession averages.

Manufacturing

Manufacturing activity continued to grow modestly during the period. However, the indexes for new

orders and shipments suggested less widespread growth compared with the prior period.

Manufacturers expected slight growth in activity over the next six months, a slowdown from the

prior period. The indexes for future general activity, new orders, shipments, and employment all

suggested less optimism than in the prior period. In March, the share of firms expecting higher

capital expenditures in 2025 compared with 2024 slightly exceeded the share of firms expecting

lower capital expenditures. However, the share of firms expecting higher capital expenditures in

2025 was down significantly from when the identical question was asked in October.

Trade and Services

On balance, firms across a broad spectrum of nonmanufacturing industries reported a moderate

decrease in activity following a slight decline last period. The index for general activity, which

Federal Reserve Bank of Philadelphia

turned negative in February, weakened further in March. The indexes for new orders and sales/

revenues also remained negative, with the new orders index falling sharply in March.

Retailers (nonauto) reported little change to a slight decline in sales during the period, following

little to no change last period. One contact indicated more aggressive price promotions contributed to an uptick in store visits, but customers mostly limited their purchases to discounted

items. Contacts described consumers as pinched and noted less frequent visits to businesses

such as coffee shops, breweries, and restaurants.

Auto dealers reported a strong increase in sales after a slight increase last period. Multiple contacts highlighted that sales hit record highs in March. However, all our auto industry contacts

attributed this boost to a pulling forward of vehicle purchases to get ahead of potential tariffs and

do not expect the strength in demand to continue.

Tourism activity rose slightly after increasing moderately last period. Contacts reported a significant drop in visits and future bookings from international tourists but noted that domestic travel

remained strong during the period. Contacts also highlighted a drag in activity stemming from cancellations for government-related travel and conferences.

The share of nonmanufacturers expecting growth over the next six months fell sharply and turned

negative, with the index falling to its lowest level since April 2020.

Real Estate and Construction

Brokers again reported a slight decline in existing home sales. Contacts continued to stress that

the lack of housing inventory was the biggest constraint on sales growth and that a lack of affordability dampened activity further.

Homebuilders reported a moderate decline in activity during the period, slowing from a slight

decline last period. In addition to an overall slowing in sales and prospective buyer traffic, contacts reported a drop in average sales prices, with customers opting for smaller homes or less

expensive townhomes. One contact noted a backlog of sales will put a floor on activity this year,

but multiple contacts cited the stock market volatility in early April and recent drops in consumer

confidence as headwinds for future sales.

In nonresidential markets, leasing activity and transaction volumes appeared to hold steady in the

retail, commercial, and industrial segments. However, demand for logistics-related industrial space

is showing signs of slowing slightly, according to contacts.

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Commercial real estate contacts continued to report a slight decrease in construction activity this

period. A few contacts noted projects in early development phases have been paused to work out

possible tariff-related cost changes. Another contact reported a delay in federal funding impeded

previously planned municipal projects.

Credit Conditions

The volume of bank lending (excluding credit cards) held steady during the current period (not seasonally adjusted)—an improvement over last period’s slight decline but weaker than the slight

growth in the same period a year ago.

District banks reported a moderate decline in commercial and industrial loans and modest drops

in auto loans and other consumer loans. Meanwhile, mortgage lending grew moderately, home

equity lines grew modestly, and commercial real estate loans ticked up. Credit card volumes

declined moderately, in line with the decline in the same period a year ago.

Banking contacts reported little change in overall asset quality despite a slight increase in past

due payments and delinquency rates. Multiple contacts also noted a slower loan pipeline due to

potential policy and price variability that has caused businesses to delay investment decisions.

For more information about District economic conditions visit: https://www.philadelphiafed.org/

regional-economy.

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Federal Reserve Bank of

Cleveland

Summary of Economic Activity

On balance, contact reports were consistent with flat business activity in the Fourth District in

recent weeks, suggesting a weaker-than-usual spring. Contacts generally expected activity to

remain flat in the months ahead. Consumer spending was down; however, some auto dealers

reported an increase in sales as customers sought to purchase cars ahead of potential tariffs.

Demand for manufactured goods continued to soften, a situation which contacts attributed to

uncertainty regarding tariffs. Construction contacts noted an uptick in demand but expected

demand to diminish in the coming months given potential materials cost increases due to tariffs.

On balance, employment levels increased slightly, and wage pressures remained moderate.

Although contact reports suggested moderate growth in nonlabor input costs, reported price

increases continued to be modest.

Labor Markets

Employment levels generally increased slightly in recent weeks, according to contact reports. Contacts in the manufacturing, construction, and retail sectors reported hiring additional staff to

accommodate business expansion and increased demand. A few contacts noted that their firms

took advantage of the cooler labor market to hire for roles in which candidates were previously

scarce. By contrast, several contacts reported that softer demand caused them to reduce headcounts, while others put hiring efforts on pause because of an uncertain market outlook. On balance, firms expected employment to continue to see slight growth.

Contacts reported that wage pressures were moderate over the last two months. Across industries, firms continued to implement cost-of-living and merit-based wage increases for existing

employees. New employees in some key positions earned higher starting salaries, though contact

accounts suggested that labor market pressures were broadly softening, allowing firms to maintain flat starting wages for many roles.

Prices

On balance, contacts indicated that nonlabor input costs rose at a moderate pace in recent

weeks. Contacts from multiple sectors noted that some of their suppliers increased prices in

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The Beige Book

anticipation of import tariffs, and many firms whose suppliers had yet to raise prices said that

they expected increases in the near term. Manufacturers and construction contacts reported

higher costs for steel and other materials, while multiple retailers reported higher costs to import

both intermediate and finished goods. Contacts generally expected costs to grow at a strong pace

in the coming months.

Contacts suggested that selling prices again grew at a modest pace on balance, though most continued to report holding prices steady in recent weeks. Many firms that raised prices reported

doing so to keep pace with rising employee compensation or materials costs, while a smaller

share mentioned normal annual increases. Overall, retail contacts indicated that they were

increasing prices moderately, and one retailer added that its firm was testing the effects of price

increases to offset anticipated import tariffs.

Consumer Spending

Consumer spending declined moderately, and contacts expected this decline to continue—albeit

at a slow pace—over the coming months. Several food and hospitality contacts tied decreased

foot traffic to economic and political uncertainty, and they expected consumers to pull back on

spending or trade down to more affordable options. Conversely, some auto dealers reported that

the threat of tariffs drove customers to purchase automobiles prior to potential price increases.

Several retailers had difficulty forecasting the impacts of policy and economic uncertainty on consumer demand, and they worried that consumer spending would pull back further.

Manufacturing

Contact reports suggested a moderate decline in demand for manufactured goods, and the largest

share of firms expected demand to be stable at the current low level in the coming months. Contacts across industry segments cited uncertainty about import tariffs and other government policies as the primary reasons for softer orders, and some producers were concerned that their

firms’ exports could be subject to reciprocal tariffs; one contact added that some foreign customers had already begun to cancel existing orders. Still, a small number of manufacturers

expected demand for their products to increase if firms seek domestic sources of inputs previously sourced from abroad or as trade policy comes into better focus.

Real Estate and Construction

Demand for homes increased moderately in recent weeks as the spring selling season began to

heat up. One homebuilder saw somewhat lower mortgage rates attracting buyers to the market,

and another attributed higher contract volume to new-home buyers getting ahead of potential

materials cost increases related to tariffs. One industry contact saw falling demand for new builds

Federal Reserve Bank of Cleveland

but rising demand for remodels and additions. Contacts expected a slowdown in demand over the

coming months due to increasing construction costs associated with tariffs and uncertainty in the

broader economy.

On the nonresidential side, contacts reported that demand for new projects declined slightly. Several commercial builders said that tariff policies and an uncertain economic environment were

keeping firms from moving forward with projects. On balance, contacts expected activity to slow

further in the coming months. Many anticipated that policy uncertainty would continue to dampen

demand for commercial buildings.

Financial Services

Overall, bankers reported that loan demand increased slightly over the last several weeks. A

couple of bankers attributed this increase to improved optimism among some of their clients

related to a more “pro-business” administration. Another banker said that loan demand was

stronger for commercial real estate and commercial and industrial loans than in previous years.

However, several other bankers noted that clients held off on large purchases due to increased

economic uncertainty. Looking ahead, some bankers anticipated a decline in loan demand due to

uncertainty surrounding interest rates, government spending, and trade policy. Bankers predominantly reported that core deposits increased at their institutions, a situation which one attributed

to clients withdrawing money from the stock market.

Nonfinancial Services

Demand for professional and business services was robust on balance in recent weeks, according

to contact reports. One law firm saw increased demand from government and nonprofit clients

driven by questions on policy changes. Meanwhile, another law firm specializing in mergers and

acquisitions reported stable demand as its clients awaited policy clarity, but it expected demand

to rise as tariff policies become clearer. Contacts generally expected professional and business

services demand to grow slightly in the coming months. By contrast, freight contacts reported a

slight decline in demand, a circumstance which several contacts attributed to economic policy

uncertainty. Freight contacts expected modest growth in the coming months.

Community Conditions

In a semiannual survey of nonprofit organizations, respondents who assist jobseekers reported a

decline in job availability over the past six months. Some respondents indicated that employers

were less willing to train individuals and were conducting more interviews before hiring. A majority

of respondents said that price increases continued to impact the financial well-being of low- and

moderate-income households, leading more households to rely on credit cards to purchase basic

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The Beige Book

necessities. Several contacts expressed concern about their organizations’ funding due to a

decline in individual donations and uncertainty regarding federal funding.

For more information about District economic conditions visit: https://www.clevelandfed.org/en/

region/regional-analysis.

21

Federal Reserve Bank of

Richmond

Summary of Economic Activity

On balance, the Fifth District economy grew mildly in recent weeks. Reports on consumer

spending were mixed with some businesses seeing sales pick up as weather improved but others

seeing sales decline due to declining consumer confidence and job security fears from federal

workers. Residential and commercial real estate activity increased slightly this cycle. Manufacturers and financial services providers reported steady demand. Nonfinancial services, on the

other hand, reported a modest decline in demand due to heightened uncertainty impacting their

clients’ ability to make decisions. Employment levels were little changed, overall. Price growth

picked up slightly as some firms increased prices due to tariffs, but year-over-year price growth

remained within a moderate range.

Labor Markets

Employment in the Fifth District, on net, was unchanged in the most recent period. However, many

federal government workers were laid off or put on administrative leave in recent weeks. These

cuts to the federal workforce have impacted businesses throughout the entire district. In addition,

federal contractors have laid off workers in response to spending cuts. For example, a research

organization headquartered outside the DC-region laid off workers due to contracts being cancelled. Similarly, a Northern Virginia consultancy reduced headcount by 25 percent due to losing

half their contracts. Non-government employers generally reported a slight improvement in labor

availability and moderating wage pressure, though firms in manufacturing and skilled trades continue to report that the availability of workers with the right skills constrains growth, particularly in

smaller towns.

Prices

Price growth edged slightly higher in recent weeks but on a year-over-year basis growth remained

moderate. Several firms said that they recently raised their prices because their costs had

increased as a result of tariffs. Many firms said that they were receiving letters from suppliers and

sending letters to their customers warning that prices could increase in the near future due to tariffs. Several businesses said that until they had a better idea of how tariffs might impact them,

they were minimizing new investments and planning for various cost scenarios.

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The Beige Book

Manufacturing

Manufacturing activity in the Fifth District was unchanged in the recent reporting period. Several

contacts had a positive first quarter but expected activity to be negatively impacted in coming

months due to increased uncertainty and tariffs. A sheet metal fabricator wasn’t sure about future

orders due to steel tariffs leading to price increases. Several contacts put investments on hold

due to increased uncertainty. A military equipment manufacturer reported conditions being “too

chaotic” to make any decisions on future investments. A wall panel manufacturer has no long-term

investment plans due to increased market uncertainty. A coffee roaster, whose beans can only be

sourced internationally, reported historic cost increases which resulted in historic price increases

for their customers.

Ports and Transportation

Overall cargo volumes in the Fifth District decreased modestly since the last reporting period, with

some variance between ports. Cargo volumes briefly returned to normal in February as labor

agreements were resolved but have been more volatile in recent weeks due to tariff announcements and enactments. For example, steep declines were reported for farm and construction

equipment after steel and aluminum tariffs set in. In contrast, imports for autos and some retail

goods increased as orders were placed to get ahead of potential tariffs. Loaded exports were

down significantly with one port noting an “unexpected and disappointing” 25 percent decline

month over month. Port contacts were particularly concerned about the proposed port call tax on

Chinese vessels which, by their estimates, could quadruple cargo handling costs. Some ports

received multi-million-dollar tariff bills on Chinese cranes that were already ordered and enroute as

tariffs were enacted and are now subject to the tariff. Rail saw record volumes this period with

high storage levels; contacts attributed the extra cargo to tariff front-loading and extended gate

hours to accommodate the extra freight. Trucking volumes were relatively flat but respondents

expected overall freight volumes from China specifically to dip in the coming months.

Retail, Travel, and Tourism

Consumer spending was flat, on balance, but individual reports were mixed. Some retail businesses said that sales were up compared to January and February, but both of those months were

soft due to adverse weather conditions. Other retailers and restaurants in Virginia and Maryland

said that sales were down and attributed some of the decline to consumer sentiment and the fact

that their client base included federal workers and contractors who were pulling back on discretionary spending in case they lose their job. Travel and tourism contacts also gave mixed reports

with some seeing a bounce back in March as weather was more favorable and others reporting

declines in both leisure and business travel.

Federal Reserve Bank of Richmond

Real Estate and Construction

Residential real estate activity had a slight uptick from last cycle. Home inventory levels have

begun to increase, and buyer traffic declined. Homebuilders across the district are worried about

the impacts that tariffs will have on raw material pricing. A Virginia builder noted concerns that an

increase in building supply costs will create greater housing affordability problems. This was

echoed by a broker who stated, “It seems like there is no longer a first-time homebuyer market

while million-dollar homes continue to sell.” Simultaneously, buyers were still obtaining mortgages

and receiving incentives in new construction close-outs.

Commercial real estate had a slight increase despite some uncertainty and hesitation. A

North Carolina broker stated, “we are in a time of price discovery.” Multifamily construction continued where projects had already started but few new projects were being green lit. Demand for

retail and restaurant space remained strong despite some major retailers closing locations. Office

space saw a slight decrease in vacancies as companies brought more workers back into the

office. Another broker in Virginia noted that as federal layoffs continue in D.C., government contractors are moving from space in northern Virginia to occupy the open space in federally owned

buildings. Construction continued to slow, in conjunction with fears that public sector projects will

not have federal funds as expected.

Banking and Finance

Financial institutions reported loan demand to be steady, but commercial real estate loan demand

continued to drop slightly. One lender attributed this slowing of demand to long-term higher

interest rates, a tightening of credit standards, and economic uncertainty. A few institutions

observed that consumer auto and mortgage loan borrowing continued to soften. Several institutions also noted that they were seeing a modest increase in delinquencies in both their commercial and consumer loan portfolios. Deposit levels continued to remain stable, but one institution

noted they were seeing both businesses and consumers withdrawing more funds to manage their

rising costs.

Nonfinancial Services

Nonfinancial service providers reported modest decreases in demand for their services and

expected this trend to continue throughout the year. An architectural firm noted that the year was

off to a strong start, but the threat of tariffs and uncertain economic conditions have impacted

their clients’ ability to make business decisions. A variety of firms, all with ties to some form of

federal government funding, indicated that the uncertainty of these payments caused them to

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The Beige Book

change their outlook for the year. The reactions to this change included the possibility of reducing

their workforces and/or looking for other revenue streams.

For more information about District economic conditions visit: https://www.richmondfed.org/

research/data_analysis.

25

Federal Reserve Bank of

Atlanta

Summary of Economic Activity

The Sixth District economy grew slightly, on balance, over the reporting period. Labor markets were

little changed, but some firms noted plans for slight reductions in headcount amid softening

demand or rising cost pressures. Wages, nonlabor costs, and firms’ prices rose modestly. Consumer spending fell slightly, and travel and tourism activity declined at a modest pace. Home

sales rose modestly, home inventories increased, and affordability declined further. Commercial

real estate conditions weakened. Transportation activity rose slowly, and manufacturing decelerated. Loan growth was flat. Energy activity grew at a slow pace, and agricultural demand declined

somewhat.

Labor Markets

Employment was little changed from the previous report. Many firms reported fairly stable demand

for workers and roughly flat headcounts. However, a small but increasing share of contacts noted

plans for slight reductions in force as a result of softening demand or mounting cost pressures.

Some contacts mentioned concerns about uncertain international trade policy further moderating

demand, which could trigger additional downsizing. While not a majority, several firms have seen a

drop in labor supply amid tightening immigration policy. Concerns about future labor constraints

have grown in several sectors but were especially pronounced in construction and agriculture.

Wages grew modestly since the February report. Most contacts expected 2025 wage increases to

be similar to those seen in 2024. Some pointed to the rising cost of living as putting upward pressure on wages, but the bargaining power continued to shift from employees to employers.

Prices

Prices and nonlabor costs increased modestly. Price increases, both realized and expected, were

largely attributed to the direct and indirect impacts of trade policy. Many firms raised prices amid

higher costs resulting from tariffed inputs, and even some firms not directly impacted cited tariffs

and less foreign competition as a trigger for price increases. Most contacts expect to pass

through the cost of tariffs, even if it means a drop in sales; however, some consumer-facing firms

noted increased price sensitivity among customers has led them to be strategic with targeted

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The Beige Book

pricing. Inflationary trends prevailed across sectors, signaling that the effects of trade policy are

spreading and are no longer limited to the goods space.

Consumer Spending

Consumer spending declined modestly. Some retailers noted a decrease in foot traffic, and consumers increasingly opted to eat at home instead of at restaurants. Apparel retailers reported

softer demand and expressed concerns about sales falling further amid the added cost of tariffs,

since most apparel is imported. Demand for furniture, which was already weak, continued to fall.

There were also ongoing reports of consumers trading down to value products or bulk purchases.

Travel and tourism activity declined modestly. Hoteliers noted slight decreases in occupancies,

and guests shortened stays and reduced discretionary spending on property. Business travel fell.

Live entertainment venues saw declining ticket sales. Large attractions that normally draw international visitors saw a drop in travelers from abroad, particularly Canada, and airports and airlines

reported a notable decline in foreign passengers to the U.S.

Construction and Real Estate

Home sales improved modestly since the previous report, in line with seasonal trends. Existing

home inventories grew moderately, with some markets, like southwest Florida, rising more sharply.

However, most markets continued to see inventory shortages, causing steady upward pressure on

housing prices. This, combined with elevated mortgage rates, has driven home ownership affordability to historic lows. Demand for new homes ticked up though was below expectations, and

homebuilders continued to offer incentives to promote sales. Homebuilders’ optimism waned amid

rising costs, labor and lot shortages, and a shrinking pool of buyers.

Commercial real estate activity weakened. Challenges remained in the multifamily segment,

though demand accelerated somewhat through expanded concessions amid elevated vacancy

rates. Office activity was bifurcated, as newer buildings experienced stronger leasing and sales

rates than older properties requiring upgrades or offering fewer amenities. Demand for industrial

space was sluggish, and warehousing capacity rose as new properties came online. Widespread

uncertainty along with tightened lending standards slowed investment decisions.

Transportation

Transportation activity rose modestly, on balance, over the reporting period. Some ports experienced significant year-over-year increases in container volumes and a rebound in roll-on roll-off

shipments following a decline in February. Intermodal rail shipments increased, and total traffic

improved from year-earlier levels. Demand was mixed for inland barge carriers, with one reporting

Federal Reserve Bank of Atlanta

steep declines in coal exports and other commodities, and another noting stable freight volumes

but an expectation for weakening activity amid growing concerns by exporters over reciprocal tariffs. Freight brokers saw a sharp drop in average loads per day after months of strong demand as

importers pulled inventories forward ahead of new tariffs. Lack of clarity around international trade

policies was noted as the biggest risk to the outlook.

Manufacturing

Manufacturing activity declined slightly since the previous report. A beverage producer noted softer

sales. Contacts in lumber and wood products manufacturing experienced slowing demand amid

ambiguity surrounding tariffs—one firm noted having “zero faith in even a 6-month forecast,” and

that the biggest hurdle to expansion and mergers and acquisitions was not knowing how trade

policy will settle out. Conversely, a steel fabricator reported record backlogs with the most

strength coming from federally funded projects. Several manufacturers reported slowing or

pausing capital expenditures because of economic uncertainty.

Banking and Finance

Loan growth at Sixth District financial institutions was flat, on net, over the reporting period. While

there was robust growth in the multifamily lending category, consumer loans, excluding autos and

credit cards, contracted sharply. Cash-to-assets ratios saw a moderate decline as cash balances

fell and assets held steady. Deposit balances and borrowings declined proportionately, leaving

loan-to-deposit ratios unchanged. Banks reported no significant increases in delinquencies.

Energy

Energy activity grew slowly. Liquefied natural gas production remained an area of strength in the oil

and gas sector, both domestically to fuel data center expansions and for exports abroad. Utility

company contacts reported growth in the commercial and residential segments but noted that

industrial activity had slowed. Energy contacts expressed concern over tariffs on imported crude

oil and refined petroleum products, as well as equipment and parts used for chemical plant construction. Some firms described uncertainty about economic conditions in the short term, but

most remained upbeat about the long term, given strength in energy and power demand.

Agriculture

Agricultural activity declined slightly. Dairy farmers saw demand soften, partially attributed to

decreased exports of cheese to Mexico. Cattle ranchers continued to note strong beef sales and

higher prices amid limited supply. Demand for chicken was strong. Egg supplies continued to be

limited by cases of Avian Flu. Demand for timber remained low. Contacts reported moderating

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The Beige Book

demand for fruits and vegetables. Cotton, grain, and other row crop growers continued to struggle.

Farmers were concerned about increasing costs of fertilizer imports given trade policy changes.

For more information about District economic conditions visit: https://www.atlantafed.org/

economy-matters/regional-economics.

29

Federal Reserve Bank of

Chicago

Summary of Economic Activity

Economic activity in the Seventh District was little changed on balance over the reporting period

and contacts expected a slight decrease over the next year. Many contacts noted heightened

uncertainty in their outlooks due to uncertainty over the direction of federal trade policy. Consumer

spending increased modestly; employment and construction and real estate activity were up

slightly; manufacturing was flat; business spending declined slightly; and nonbusiness contacts

saw a slight decline in activity. Prices increased modestly, wages rose slightly, and financial conditions tightened. Prospects for 2025 farm income were unchanged.

Labor Markets

Employment increased slightly over the reporting period and contacts expected a similar pace of

growth over the next 12 months. Contacts largely reported either stable or easing hiring conditions, though a few, primarily in manufacturing, continued to have difficulty hiring. Several contacts

across a variety of industries said they were fully staffed or hiring only for replacement, with only a

few expecting to increase staffing over the next year. Wages and benefits costs were up slightly

overall. Several contacts noted that following a few years of very large gains, annual wage

increases for the coming year were close to historical averages.

Prices

Prices rose modestly since the last report, though contacts expected the pace of growth to pick up

over the next 12 months. Producer prices increased slightly. Nonlabor input costs rose, with

reports of higher prices for raw materials and equipment. Numerous manufacturing contacts said

they were facing heightened uncertainty about both input costs and selling prices, and many attributed the uncertainty to changing tariff policies. One machinery manufacturer reported that vendors

were changing prices on a daily basis. Consumer prices rose modestly overall. One retail industry

analyst expected the price impacts of higher tariffs to largely be felt in the second half of the year

and said retailers were expecting to pass about one-third of higher tariff costs on to consumers.

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The Beige Book

Consumer Spending

Consumer spending increased modestly over the reporting period. Nonauto retail sales were up,

led by spending on big-ticket items such as appliances, computers, and other electronics. Contacts attributed the growth to consumers pulling ahead spending in anticipation of higher tariffs

later in the year. Leisure and hospitality spending softened overall, with restaurants posting higher

sales but spending on hotels, air travel, and tourist attractions weakening. Some contacts noted

that visits from Canadians were down moderately year-to-date. Light vehicle sales increased moderately, with sales accelerating near the end of March as consumers pulled ahead purchases to

avoid higher tariffs. Dealers expected strong demand to continue until existing inventories run

down and tariffs start to affect pricing.

Business Spending

Business spending declined slightly since last report. Capital expenditures fell slightly and expectations for spending over the coming year also declined. Multiple contacts reported hesitancy to

make capital purchases due to uncertainty over the economic outlook. Demand for truck transportation was flat, though freight rates decreased slightly. Retail inventories ticked up from a high

level. Inventories of new vehicles were elevated as dealers reported adding to their stocks ahead

of potential tariff increases. Manufacturing inventories were comfortable overall, and reports of

materials shortages remained low.

Construction and Real Estate

Construction and real estate activity increased slightly over the reporting period. Residential construction was flat. Residential real estate activity moved up slightly, led by greater demand for

townhomes and starter homes. Prices increased slightly as well, but rents were unchanged. Nonresidential construction was up a little, though contacts expressed concern that tariff-induced

price increases on items such as large appliances, glass, and windows would slow activity. Commercial real estate demand was unchanged.

Manufacturing

Manufacturing activity was flat on balance in the District. Steel orders increased slightly, with one

contact reporting an increase in demand from the energy sector. Fabricated metals sales rose

modestly, in part due to more orders from the defense industry. A couple of contacts in fabricated

metals expressed concern that prices for nickel would spike because a large share is imported

from Canada. Machinery sales declined moderately, with higher demand from the aerospace

industry more than offset by lower demand from the automotive industry. Auto and heavy truck

production declined slightly.

Federal Reserve Bank of Chicago

Banking and Finance

Financial conditions tightened modestly over the reporting period. Market volatility was elevated

and bond and equity values fell significantly. Business loan demand increased modestly overall.

However, one banking contact noted that many clients had put major decisions on pause due to

uncertainty about the state of the economy and another noted that capital expenditures had

slowed. One contact in M&A said activity was at a “standstill.” Business loan quality and rates

decreased slightly, and terms remained flat. In the consumer sector, loan demand increased

slightly, and quality edged down. Consumer loan rates and terms were flat.

Agriculture

Farm income expectations for 2025 were largely unchanged, though there was greater uncertainty

due to trade policy announcements. Contacts expressed concerns about potentially losing export

markets but also mentioned that greater purchases of agricultural products could be a way for

some countries to lower trade deficits with the US. Corn, soybean, and wheat prices decreased.

Fieldwork was underway to prepare for planting, though abundant moisture slowed preparations in

the eastern part of the District. Contacts expected slightly more corn acres to be planted instead

of soybeans given relatively favorable price movements for corn and a perception of greater export

exposure for soybeans. While input prices for farmers rose some, vendors had cut financing rates

to incentivize sales, in some cases down to 0 percent. Cattle prices increased, while egg, dairy

and hog prices decreased. Contacts reported that livestock operations were in better financial

shape than crop operations. There were limited sales of new farm machinery.

Community Conditions

Community, nonprofit, and other nonbusiness contacts reported a slight decrease in economic

activity over the reporting period, and many expressed concerns that changes in federal policies

were negatively affecting small businesses and low- and moderate-income communities. State government officials reported little change in activity but increased uncertainty in the economic outlook. Local labor markets were stable overall, though there were reports of layoffs at nonprofit

organizations which had been affected by federal funding cuts. Low- and moderate-income consumers continued to face elevated prices, with food pantry leaders noting the particular challenge

of sourcing adequate amounts of eggs and chicken, two common sources of protein.

For more information about District economic conditions visit: https://chicagofed.org/cfsec.

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32

Federal Reserve Bank of

St. Louis

Summary of Economic Activity

Economic activity has remained unchanged since our previous report. Employment levels were

unchanged and wage growth has been modest, although contacts reported the possibility of a

future reduction in force. While prices continued to increase moderately, contacts indicated that

the increases were starting to accelerate. District businesses were negatively impacted by heavy

rains, delaying the delivery of merchandise, postponing events, and flooding businesses, farms,

and neighborhoods. Contacts expressed a lot of uncertainty and an elevated effort in estimating

the impact of tariffs and ways to reduce cost increases and supply disruptions. They also noted

that they were unwilling to make changes due to elevated uncertainty. The outlook has continued

to decline from neutral to slightly pessimistic.

Labor Markets

Employment has remained unchanged since our previous report. A staffing agency in Kentucky

reported that hiring activity picked up at the end of the first quarter, but several contacts in the

region reported no changes in employment. Retailers felt the hiring market had shifted back in

their favor, with more candidates eager to work. One contact indicated turnover in their call center

had been very low recently. While there have been few reports of layoffs, several contacts indicated the possibility of reducing headcount in the future. A software service company indicated

they created a contingency plan to reduce staff, but they were not actively planning to do so.

Wage growth has been modest. One contact reported that wages were stable, and another

reported they were expecting no wage increases for 2025. In Missouri, small businesses have

expressed confusion about changes in the state’s sick leave policies.

Prices

Prices have increased moderately since our previous report; however, businesses expect costs to

increase due to tariffs and are looking for ways to reduce the impact on their profits. A retailer indicated that price growth accelerated from the previous quarter, particularly food prices, with general

merchandise prices increasing slightly. A pharmacy reported they were starting to see price

increases from manufacturers, but their costs had not been impacted yet as they had built up

Federal Reserve Bank of St. Louis

inventory. A retailer indicated their initial worst-case-scenario estimates of tariffs would result in a

less than two percent cost increase; however, their updated estimates—prior to April 2—indicated

they would face a five percent increase. A manufacturer reported that what initially looked to be a

mild impact had worsened and was forcing them to evaluate sourcing options. Large retailers

announced to their suppliers they would not accept price increases due to tariffs, and an HVAC

supplier reported they would now price their equipment based on shipment dates rather than contract or purchase order dates.

Consumer Spending

Consumer spending reports were mixed. Hospitality contacts reported little change in activity, with

mixed reports on restaurant sales. Hotel bookings have generally remained strong, with some

reports of cancellations due to a pullback in federal spending. Retail sales have been mixed:

Sales of personal care items, cosmetics, and groceries increased while sales of home appliances,

toys, and seasonal items decreased. Retailers catering to higher-income customers reported

sales were flat. Auto dealers reports were mixed. In Arkansas, one dealer continued to report

vehicles sales have been weaker than expected and the outlook had deteriorated; Louisville

dealers reported increased showroom traffic, while noting this would likely fall as soon as the tariffs took effect. Retailer inventories have increased slightly due to a combination of pre-ordering in

advance of tariffs and weaker-than-expected sales.

Manufacturing

Manufacturing activity has been flat on net since our previous report. Survey indicators suggest a

slight increase in manufacturing activity in Missouri and Arkansas, with an increase in employment, production, and new orders. An Arkansas electrical equipment manufacturer reported they

had a three-year backlog of orders and that demand for their products continued to increase. A

vehicle manufacturer reported that they were running at 60 percent of their capacity. Contacts in

food service, retail, and consumer goods plants in Kentucky reported their schedules had been

softening. Contacts reported concerns about price and supply issues that had led to higher inventories and efforts to domesticate the supply chain. Some contacts also reported they were reluctant to execute previous capital investment plans or create new ones due to ongoing uncertainty. A

bourbon distillery indicated that planning ahead felt almost impossible when trade rules kept

changing.

Nonfinancial Services

Activity in the nonfinancial services sector has been mixed. Transportation and logistics contacts

noted an increase in activity as steel-related customers have increased their production in anticipation of tariffs. Transportation firms remain optimistic that demand for materials will continue,

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The Beige Book

but they are concerned about tight margins. Recent heavy rains resulted in postponed or cancelled

deliveries due to impassable roads and flight cancellations. A contact in auto mechanics reported

strong activity with lead times of over one week to schedule repairs, noting that this uptick in

demand could be related to customer concerns about tariff impacts on parts. A software service

provider reported they had to cut their growth targets and were pressuring their sales team to

“push hard” now, as they expected sales to become increasingly difficult next quarter.

Real Estate and Construction

Residential real estate activity has remained unchanged since our previous report. Active listings

have increased relative to a year ago but sales continue to fall behind. One contact reported

observing a slowdown in home buyer and seller activity around the time of the tariff announcement. A home builder in Little Rock reported their business had slowed considerably and that

houses were staying on the market longer. In contrast, another builder reported that lower mortgage rates had started a surge in home building and the increase in activity was evident.

Commercial real estate has improved slightly. Contractors in Kentucky reported the commercial

construction market remained steady. Supply chain disruptions are impacting the lead times for

materials, which have pushed project timelines and increased construction costs. While some construction companies have diversified their supplier network and begun pre-ordering materials,

other businesses halted projects due to substantial increases in costs due to tariffs. A builder in

Arkansas reported their backlog of projects remained stable, with slight increases in commercial

and government-related work. However, they were concerned about future slowdowns due to uncertainty and a decrease in federally funded projects.

Banking and Finance

Banking activity has remained unchanged since our previous report. A Kentucky financial institution reported facing tightening margins, which had influenced their willingness to lend, while a

banker in Arkansas reported that projections for lending growth continued to be strong. A bank

reported that deposits were up compared with the same time a year ago, but they were starting to

show signs of decline as were new account openings. Bankers reported that consumer past-due

accounts continued to rise; however, the exposure was staying at 60 days or less. Similarly, they

reported observing a slight increase in small business bankruptcies and past dues. Bankers

reported that, despite a few pockets of concern, credit portfolios were strong.

Agriculture and Natural Resources

Agriculture conditions have been unchanged since our previous report. Wet soil conditions combined with significant rainfall has delayed planting, and in some areas, flooding will require

Federal Reserve Bank of St. Louis

replanting of crops. A farmer in Arkansas reported not being able to sleep for three days due to

the disruptions caused by the flooding. While operating incomes for row-crop farms are expected

to be negative in 2025, government supports are expected to offset losses. The outlook for meat

and poultry producers is more favorable due to low feed prices and stable demand, particularly for

home consumption. Contacts reported elevated levels of uncertainty regarding the economic outlook and trade policy but have not made any significant changes to their operations.

For more information about District economic conditions visit: https://www.stlouisfed.org/

research/regional-economy.

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36

Federal Reserve Bank of

Minneapolis

Summary of Economic Activity

Economic activity in the Ninth District edged lower across most sectors since the last report.

Employment decreased and labor demand continued trending down. Wage pressure grew modestly, while prices moved moderately upward. Consumer spending fell slightly with noted exceptions, particularly on vehicle sales. Construction activity fell overall, reflecting elevated uncertainty.

Commercial real estate was mostly flat, and sales of residential units edged lower. Manufacturing

activity increased modestly, though sentiment was mixed. Agricultural conditions remained weak.

Labor Markets

Employment was down slightly since the last report, and labor demand cooled notably. More firms

reported a decrease in headcount compared with those reporting an increase. A large staffing firm

with multiple offices in the District reported a drop in clients and job orders on a monthly and yearover-year basis. A second, large staffing firm reported that “customers have slowed down in

hiring.” Multiple Minnesota contacts said businesses have implemented hiring freezes and temporary layoffs and have been cutting hours. Still, a Wisconsin workforce contact said, “While sentiment has been somewhat negative, we still have plenty of job openings that need to be filled.”

Labor availability continued to improve. A long-term care provider reported “a huge increase” in

applications it normally receives for open jobs, and a health care provider noted it was “flooded

with applications for IT positions.”

Wage pressure grew modestly but softened from levels earlier in the year. A survey found that the

share of contacts reporting wage increases fell noticeably in March for the second consecutive

month. A staffing company reported that year-over-year wage increases for the majority of job

placements were running just over two percent. A central Minnesota contact reported that advertised wages for some entry-level jobs were declining. One workforce contact noted that “employers

appear to have gained more leverage in wage negotiations.”

Prices

Prices increased moderately overall, with greater pressure on wholesale prices. More than a third

of District firms increased the prices they charged to customers in March from a month earlier,

Federal Reserve Bank of Minneapolis

according to a monthly survey, while more than half reported increased input prices. Contacts in

manufacturing and construction reported that they saw raw materials prices increase in anticipation of tariffs, particularly for steel and aluminum products. “Steel prices are surging faster than

they did during the 2019-2021 period when we experienced record-setting steel prices,” commented a metal fabricator. Some contacts reported placing surcharges on products using metal

inputs, while a few reported increasing prices of other outputs to compensate, and others saw

declining margins. Retail fuel prices increased modestly in most District states since the

last report.

Worker Experience

Reports from labor and workforce development contacts reflected ongoing challenges for workers

and job seekers, topped with added uncertainty from federal policies. Some contacts feared that

tariffs and federal spending cutbacks would hurt a labor market that, while softening, remained in

good shape. In Montana, a building trades labor contact attributed the growing number of “people

on the bench” to the slowdown of federally funded projects. Another labor contact in Michigan’s

Upper Peninsula warned that “the labor market door is about to slam shut . . . and consumer confidence and spending is going to plunge.” Contacts also highlighted particular stress on Indian

Country due to “frozen federal funding,” while immigrant workers in a range of occupations were

feeling uncertain about their future.

Consumer Spending

Consumer spending fell slightly overall. Retail contacts were split on recent sales trends. Recent

credit card transactions in the District showed slower spending compared with a month earlier.

Tourism contacts also reported declines in Canadian travelers and related spending; a North

Dakota retailer saw a “deep impact” starting in mid-February, pushing first-quarter revenues down

seven percent. However, vehicle sales rose across the District, possibly a short-term effect as

people “buy now to save . . . money from the future tariffs,” according to one District dealership.

Numerous contacts noted a more cautious, cost-conscious consumer. Several bankers in Montana

said consumer loan activity was slow because people were nervous to acquire debt. A manufacturer of consumer goods said, “It is extremely difficult to predict consumer behavior now and for

the rest of the year.”

Construction and Real Estate

Construction fell since the last report. While some firms reported that activity was picking up with

spring, a larger share reported a decline in activity, most often citing economic uncertainty. A

Minnesota heating and cooling firm said it was “bracing for an unpredictable year.” Numerous contacts, particularly in architecture and engineering, reported delays in projects moving forward. A

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The Beige Book

Minnesota firm said, “New projects have dried up completely in the first quarter. . . . Uncertainty

and chaos at the federal level has frozen pretty much all activity.” Another said that “clients are

hesitant to proceed with design until some sort of certainty and predictability comes back.” Preliminary data on housing permits suggested relatively stable activity in March.

Commercial real estate was flat overall. Office vacancy remained high, but demand grew among

smaller tenants, leading to modest improvements in space absorption. Industrial, retail, and multifamily vacancy rates were stable, helped by generally slow activity in new construction in those

sectors. Residential real estate was widely lower; March home sales fell among most markets

with available data.

Manufacturing

District manufacturing activity increased modestly overall since the previous report, though

sentiment was mixed among contacts; some reported negative impacts from tariffs or expected

tariffs. More than half of manufacturers responding to a monthly business conditions survey

reported an increase in orders in March from a month earlier. Some contacts noted a bump in

orders due to customers seeking to build inventories ahead of expected price increases. An index

of regional manufacturing conditions indicated activity increased in Minnesota, North Dakota, and

South Dakota in March from the previous month. Some producers of construction input reported

cancellation of orders amid uncertainty about the outlook.

Agriculture Energy and Natural Resources

District agricultural conditions remained weak heading into planting season. Grain producers continued to struggle due to low commodity prices, while cattle operations were stronger. Industry

sources were concerned about widespread drought conditions because, as one contact noted,

“liquidity on balance sheets is gone and another bad year would be very difficult to survive for

most farmers.” District oil and gas exploration activity was unchanged since the previous report.

Operations were idled at two District iron ore mines due to overaccumulation of inventory amid

decreased steel demand.

Minority- and Women-Owned Business Enterprises

Activity among minority- and women-owned business enterprises (MWBEs) fell slightly, with expectations of further softening over the coming weeks. Inventory levels rose among most contacts. A

manufacturing company in Minnesota said it was “pre-buying aluminum in anticipation to tariffs.”

The majority of contacts reported higher nonlabor input prices and thinner profit margins. Many

expected their own final prices to increase in the foreseeable future. A retailer in North Dakota

expressed concerns about the effects of tariffs on prices and supply. Job openings trended down,

Federal Reserve Bank of Minneapolis

and headcount remained unchanged on balance. Over half of contacts described the first three

months of 2025 as “worse than expected.” A Minnesota manufacturer said, “We’ve been in business 12 years, and [this quarter] was like our first or second year.”

For more information about District economic conditions visit: https://www.minneapolisfed.org/

region-and-community.

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Federal Reserve Bank of

Kansas City

Summary of Economic Activity

Economic activity in the Tenth District grew slightly, but expectations about business activity and

consumer spending weakened considerably compared to the last report. Moreover, businesses’

commentary about economic conditions shifted rapidly in recent weeks, as uncertainty rose

quickly, concerns about tariffs weighed on decision making, and businesses sought to adapt their

plans. The majority of contacts indicated the most likely change to their business plans this year

would be to the prices charged for their finished products. Expectations for price growth rose at a

robust rate accordingly, though diminished demand at consumer services firms softened current

and expected price pressures somewhat. Services firms highlighted changes in hiring plans or

headcount as other likely steps to adapt to changing conditions, but employment was generally

steady across the District over the past month. Several actions by businesses to improve liquidity

and cash positions were highlighted in recent weeks, including seeking larger credit lines, selling

inventory at discounts and selling long-term assets.

Labor Markets

Employment levels remained steady across the Tenth District. Job growth was subdued as hiring

freezes reportedly became a more common occurrence. One contact stated, “this is not the time

to commit to adding labor,” citing heightened uncertainty. More generally, when asked what

changes in business plans to adapt to current conditions were most likely, services firms identified constraining hiring plans or reducing headcounts as likely, but not the primary steps they will

take. Manufacturing firms indicated any changes to their workforce would be more of a last resort.

Slowing labor demand reportedly led to weakness in the junior labor market for new grads and new

entrants.

Prices

Prices increased moderately in recent weeks on average, but expectations of price growth over the

next six months broadly rose at a robust rate. The majority of contacts indicated the most likely

change to their business plans to adapt to changes in economic conditions this year would be

“prices charged for finished products.” Manufacturing and retail sectors (i.e., goods sectors)

emphasized their current pricing does not yet fully incorporate the cost pressures associated with

tariffs, implemented or expected. Contacts indicated passing rising costs to customers will occur

Federal Reserve Bank of Kansas City

over the next several months and anticipated goods prices will rise broadly as many suppliers are

spreading cost increases across their entire product portfolios. The acceleration of price pressures in goods sectors (current and expected) stands in contrast to reported deceleration in consumer service price growth. Travel and lodging prices reportedly softened, and housing prices were

stable or even declined in certain parts of the District.

Consumer Spending

Consumer spending grew slightly over the last month, but with mixed activity across categories.

Auto sales rose at a robust rate as aggressive pricing intended to garner cash flow and clear

inventory facilitated a recent pickup in sales, which was not expected to persist. Household purchases of other durable goods also rose, but growth in spending on services was reportedly much

weaker. Recent consumer spending on travel was down modestly, and contacts described future

expectations as “a cliff,” with a substantial decline in travel bookings through the summer. Healthcare contacts reported a moderate decline in the use of preventative care and non-essential services. Businesses’ expectations for growth in consumer spending weakened further in recent

weeks, with projected growth in household spending roughly flat on average.

Community Conditions

Food banks and pantries across the Tenth District said they were contending with the combination

of rising demand, funding cuts, and substantial uncertainty about funding over the coming year.

Most pantries mentioned they expanded services over the last year, but they still struggled to

meet demand for food assistance. Funding cuts from the USDA were highlighted as particularly

impactful regarding services for seniors. Specifically, one pantry reported cutting back the amount

of food they can give from three to five days of shelf stable food to two days of food every 30 days

due to funding cuts. Pantries also expressed heightened funding uncertainty across government,

corporations, and individuals and uncertainty about food price pressures.

Manufacturing and Other Business Activity

Manufacturing activity in the Tenth District declined modestly, though the pace of contraction

slowed. Many firms began reassessing product lines, with some deciding to scale back production

of lower-margin, highly competitive goods that lacked proprietary advantages. While some manufacturing businesses reported interest in procuring domestically sourced materials and components, they indicated that interest has not translated into new contracts due to costs and capacity

constraints. Business leaders indicated recent strategy discussions shifted away from capital

investments aimed at innovation and efficiency toward a focus almost entirely on mitigating tariffrelated risks. An aerospace firm shared that the level of competitiveness for key materials

including metals have pushed lead times to between 50 to 100 weeks. Although manufacturing

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The Beige Book

firms remained generally optimistic about the broader economy, their confidence was tempered by

growing concerns about the stability of economic conditions.

Real Estate and Construction

The delivery of newly constructed multifamily housing units remained elevated, but contacts noted

the absorption of new units slowed significantly. With more available units coming online, rent

growth stagnated and even declined in certain parts of the District. Sales and transaction activity

were rising early in the year, but contacts noted the number of deals that fell apart ticked up in

recent weeks and many more deals faced significant or indeterminate delays in closing. A few

commercial real estate investors indicated replacement costs are expected to rise, which they

anticipated may lead to another increase in insurance premiums next year. These future premium

price increases reportedly weighed on the viability of certain projects and transactions, but they

were noted as tertiary concerns.

Community and Regional Banking

Loan demand was mostly unchanged on average, though several bankers noted demand for residential mortgage loans was trending up. Some bankers indicated several businesses sought

increased funding capacity to shore up their available liquidity. Many contacts reported a modest

tightening of credit standards for commercial real estate and commercial and industrial loans due

to changes in the economic outlook. Loan quality remained stable except for agriculture lending,

where conditions weakened. Most respondents indicated they anticipate some deterioration in

credit performance over the next six months due to heightened uncertainty weighing on the overall

economic outlook.

Energy

Tenth District oil and gas activity grew modestly. Just over half of contacts reported steady activity,

and about a quarter of firms—mostly smaller operators—reported growth. Despite some

increases in drilling, firms’ revenues, profits, and capital expenditures continued to decline on net.

Most oil and gas operators expect activity to remain steady in the near-term, while nearly a third

expect a pickup in activity. However, some contacts expect recent trade policy changes will

dampen activity or revenues over the next year and many anticipate higher costs for key inputs like

steel. Additionally, firms’ long-term price expectations are still below the price needed to support a

substantial increase in drilling. Accordingly, contacts noted future production growth could remain

subdued for the foreseeable future.

Federal Reserve Bank of Kansas City

Agriculture

Economic conditions in the Tenth District farm economy weakened early in April. Prices for several

key commodities declined alongside increased uncertainty surrounding export prospects. Profit

opportunities for crop producers remained limited. In the latest survey of agricultural credit conditions, lenders reported gradual deterioration in farm loan repayment rates and notable increases

in carryover debt and loan restructuring compared to a year ago. Credit conditions weakened comparatively more in portions of the District most heavily concentrated in crop production while

strong cattle prices supported farm finances in other areas. Production costs, elevated living

expenses, and further declines in working capital were cited as key concerns, with some contacts

noting that more highly leveraged borrowers were selling longer-term assets to improve liquidity.

For more information about District economic conditions visit: https://www.KansasCityFed.org/

research/regional-research.

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Federal Reserve Bank of

Dallas

Summary of Economic Activity

Growth in the Eleventh District economy slowed to a slight pace over the reporting period. Nonfinancial services activity was flat, but manufacturing output rose modestly. Retail sales dipped,

and loan demand increased slightly. Commercial real estate activity was stable, while housing

demand remained tepid. Oilfield activity rose modestly. Employment and wages grew, while input

cost pressures accelerated largely due to the expected pass through of higher tariff costs. Outlooks worsened with weakening demand, policy uncertainty, and inflation cited as primary concerns going forward. Numerous contacts voiced concern that heightened uncertainty stemming

from on-again, off-again tariffs was making it increasingly challenging to plan. Stricter immigration

policy, federal government layoffs, and a cutback in spending were also cited as headwinds

for growth.

Labor Markets

Employment rose modestly over the reporting period. Several contacts noted a wait-and-see posture on hiring amid elevated domestic and trade policy uncertainty, while some firms, including airlines, cited layoffs. Energy executives said layoffs are expected this year, and that the pace may

increase if oil prices remain close to or fall below $60. Wage pressures were stable during the

reporting period. One manufacturer noted cutting wages due to cash flow issues. Firms expect

wage growth to slow to 3.4 percent over the next 12 months, down from 3.8 percent over the past

12 months.

Prices

Prices continued to increase at a moderate pace. Firms broadly expressed trepidation about the

effect of tariffs on demand and costs, with some contacts indicating they will not be able to pass

on the increases to clients. Several manufacturers cited higher raw material prices. The impact of

tariffs on steel and machinery prices was a drag on the energy sector, particularly for firms with

ongoing construction projects for whom the materials were a sizable share of costs. A few construction and real estate contacts said that tariffs had given their suppliers an excuse to raise

prices, and some retailers cited being notified by their vendors of forthcoming tariff surcharges.

Federal Reserve Bank of Dallas

Manufacturers and retailers expect selling price increases to accelerate over the next 12 months,

while service sector executives expect price growth to remain moderate.

Manufacturing

Manufacturing output rebounded in March after weakening in February. The pickup in production

spanned both durable and nondurable goods, with strength seen in transportation equipment,

machinery, computer products, and food manufacturing. Utilization rates at Gulf Coast refineries

remained at healthy levels despite seasonal softness. While manufacturing activity picked up, outlooks worsened. Manufacturers widely voiced concern that tariffs were becoming an increasing

source of uncertainty, dampening demand, pushing up prices, and delaying and complicating business planning.

Retail Sales

Retail sales dipped during the reporting period. Declining growth in sales of nondurable consumer

products outweighed growth in durable goods. Among durables, auto vehicle sales strengthened in

anticipation of the announced tariffs. Overall retail outlooks weakened, as the potential impact of

tariffs on pricing and demand weighed on sentiment.

Nonfinancial Services

Activity in nonfinancial services stalled out following moderate growth in the previous reporting

period. Revenue rose in some sectors, however, with increases seen in transportation, health, and

professional and business services. Demand for staffing services was flat to slightly up. Airlines

noted that passenger demand had softened, with some of the weakness attributable to a marked

decline in federal government travel. Port traffic remained strong as companies accelerated their

inventory purchases ahead of tariffs. Growth paused in the leisure and hospitality sector, which

was attributed to uncertainty causing consumers to be more cautious with their discretionary

spending. Outlooks deteriorated overall, with numerous contacts stating that heightened uncertainty surrounding domestic and trade policy was hindering their ability to plan with confidence.

Construction and Real Estate

Housing demand remained tepid. The spring selling season was characterized as modest and

choppy, with a slight pickup in sales seen toward the end of the reporting period. Incentives for

new homes, including price discounts, remained prevalent. However, there were scattered reports

of builders being less aggressive on mortgage rate buy downs due to high costs. Home inventories rose, and prices were flat to down. Outlooks were cautious, weighed down by sluggish

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The Beige Book

demand, high mortgage rates, and concerns regarding the impact of immigration and trade policy

on consumer sentiment, labor supply, and construction costs.

Commercial real estate activity was stable during the reporting period. Apartment demand

remained solid, though rent growth continued to be lackluster. Office absorption was positive in

some major markets, though vacancies remained elevated. Industrial demand stayed positive but

there was apprehension about the impact of shifting trade policies on leasing activity and investment sales.

Financial Services

Loan volume and loan demand growth decelerated sharply in March. Credit tightening continued,

but loan pricing declined. Loan nonperformance increased. In addition, bankers reported that business activity contracted after expanding over the last three months, and their outlooks retreated

to cautiously optimistic. While respondents expect an improvement in loan demand and business

activity six months from now, the sentiment is less broad-based, and it is tempered by expectations of a continued increase in loan nonperformance.

Energy

Activity in the oil and gas sector increased modestly over the reporting period. While drilling and

completion activity is expected to remain steady over the next few months, contacts were worried

that lower oil prices, eroding global growth outlooks, and tariffs would dampen activity later this

year and lower spending plans for 2026. Outlooks worsened, and contacts expressed concern

that heightened uncertainty surrounding tax, trade, and regulatory policy was making planning difficult and would likely hinder investment decisions.

Agriculture

Drought conditions persisted in parts of the district, though widespread rainfall was received late

in the reporting period and provided much-needed moisture. Some extreme weather was seen,

from wind and dust storms in the Texas panhandle to flooding along the coast. Grain prices moved

down. Cattle and beef prices continued to trend up over most of the reporting period, with beef

prices rising to new highs, though cattle prices faltered somewhat in early April. Drought conditions are a hurdle for ranchers looking to expand their herds. Looking ahead, contacts expressed

some concern for agricultural exports due to tariff impacts.

Federal Reserve Bank of Dallas

Community Perspectives

Demand for social services remained elevated. Contacts said many private companies were under

a hiring freeze, and the jobs posted online were not being filled. Nonprofit organizations, particularly those heavily reliant on federal funding, reported trimming budgets, implementing hiring

freezes, laying off workers, and downsizing programming. There was a report of a housing services

nonprofit possibly shutting down operations in mid-2025 due to funding disruptions. One contact

noted that landlords were less willing to rent apartments to tenants reliant on federal funds due to

the current policy climate and funding freezes. Some social service organizations said they have

observed a slowdown in applications for new benefits and trepidation among clients seeking services in light of recent immigration policies. Research universities were also facing significant

uncertainty due to the funding cuts from the National Institute of Health and National Science

Foundation.

For more information about District economic conditions visit: https://www.dallasfed.org/

research/texas.

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Federal Reserve Bank of

San Francisco

Summary of Economic Activity

Economic activity in the Twelfth District slowed slightly during the mid-February through March

reporting period. The step-down in economic activity was broad based, reported across many

industries and different geographies. Employment levels fell somewhat, and employers across

industries and geographies reported recent and planned layoffs. Wages grew slightly. Overall

prices rose modestly, and price pressures intensified for a wide range of imported goods and

materials. Demand for retail and services weakened as both households and firms were more cautious with their spending amidst elevated economic uncertainty. Manufacturing activity decreased

slightly, while conditions in the agriculture and resource-related sectors were largely unchanged.

Activity in residential and commercial real estate markets softened slightly on net, and lending

activity was stable. Demand for community support services remained high. Overall sentiment and

the economic outlook worsened materially relative to the prior reporting period, and several contacts expected a notable downturn in labor market conditions over the coming months.

Labor Markets

Employment levels fell slightly in recent weeks, and the labor market outlook generally deteriorated. Contacts across industries and geographies reported recent and planned layoffs, with some

citing lower demand from both private- and public-sector customers and others seeking cost efficiencies. Employers who sought to hire found it generally easier to attract qualified applicants,

though engineers and workers in the skilled trades were notable exceptions. A large hospitality

services provider plans to hire significantly fewer seasonal workers this year due to lower expected

demand as well as to pause hiring work visa holders amidst policy uncertainty.

Wages continued to grow at a slight pace, in line with prior reporting periods. Contacts described

the current labor market to be generally favorable to employers, with fewer opportunities for prospective employees to negotiate starting pay. Nevertheless, recent increases in state and local

minimum wage mandates continued to put upward pressure on wages for some positions in the

service sector, especially in California.

Federal Reserve Bank of San Francisco

Prices

Overall price levels rose modestly in recent weeks, at a slightly faster pace than in the previous

report. Contacts reported higher price pressures for a wide range of imported goods and raw

materials, including aluminum, steel, lumber, electrical components, apparel, footwear, as well as

various wholesale and retail food items. Cost of some services remained elevated, particularly for

insurance, health care, and utilities. Some leisure and hospitality businesses facing softening

demand lowered their prices to retain and attract customers. Several contacts received price

increase notices from suppliers, citing recently implemented and anticipated increases in tariff

rates. Contacts generally expected inflationary pressures to intensify over the coming months.

Most contacts reported that they plan to pass increased input costs on to customers, but some

expected to absorb cost increases to preserve market share.

Community Conditions

Community support services providers reported deteriorating conditions. Demand for housing and

food assistance services remained high. Organizations providing workforce and economic development services focused on sectors experiencing strong demand including health care, skilled

trades, and technical manufacturing. Funding fell from public and private sector sources because

of recent changes to federal policy as well as reduced discretionary and philanthropic spending by

private businesses. Funding shortfalls led some nonprofits to cut services and program offerings

and to lay off workers. Contacts in the Los Angeles region noted that demand for community services and support related to wildfire recovery efforts remained high.

Retail Trade and Services

Retail sales fell modestly in recent weeks. Several contacts reported a notable drop in discretionary spending for big-ticket items such as cars and large appliances, home improvement products, and nonessential groceries. Demand for essential goods remained steady. Reports indicated

that many households were cautious with their spending decisions in anticipation of a downturn in

labor market conditions. Retailers generally expected sales to soften further over the

coming months.

Demand for consumer and business services weakened moderately. Consumer demand for air

travel, hotels, and entertainment events slowed—an atypical trend for the early spring growth

period. In addition, several contacts reported weak booking volumes for the summer. Restaurant

sales varied by segment, with fast-food franchises faring better than full-service establishments.

Some retailers and hospitality providers in Northern Washington and Southern California reported

a material drop in cross-border tourism with Canada and Mexico. Several reports from the business and professional services sectors highlighted slower demand, including for group travel,

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The Beige Book

security, catering, and janitorial services. One business service provider in Southern California

noted that ongoing economic uncertainty resulted in spending cuts and austerity measures from

their corporate clients.

Manufacturing

Conditions in the manufacturing sector weakened slightly in recent weeks. Demand softened for

some manufactured products such as utility infrastructure components, office furniture, lumber

products, and packaging machinery, as customers were feeling more price sensitive and uncertain

about economic conditions. In contrast, demand was solid for equipment repair parts. Firms

reportedly paused or reduced capital investment plans, citing economic uncertainty and lower

demand for their products. However, one manufacturer of packaging machinery kept existing

investment plans in place based on higher order pipelines. Materials were largely available with

typical lead times. Some manufacturers held inventories at elevated levels to weather rising input

cost and availability issues.

Agriculture and Resource-Related Industries

Conditions in the agriculture and resource-related sectors remained mostly unchanged. Retail

demand for agricultural products was solid overall. Contacts raised concerns that changes in trade

policy could reduce demand for agricultural exports, particularly fruits and nuts. Crop yields were

solid, and early indications for this growing season were good. Labor availability was largely sufficient to meet demand, though contacts worried about future availability constraints from changes

in immigration policy. Production costs remained elevated due to weather-related disruptions and

high input costs. At the same time, prices that growers received for many agricultural commodities, such as corn, wheat, and hay, were reportedly low. Contacts held back on planned capital

investments, citing high costs and uncertainty about future prices.

Real Estate and Construction

Slow activity in residential real estate continued. Prices of single-family homes remained high.

Nevertheless, demand was reportedly solid in some parts of the Mountain West. Multifamily rents

rose in line with inflation. Construction of new residential properties slowed overall. Developers

cited higher costs for construction materials as well as uncertainty about economic conditions,

including future demand from consumers facing higher home prices and mortgage rates.

Conditions in commercial real estate weakened somewhat. Leasing activity for warehousing, retail,

and wholesale space fell as tenants paused expansion plans. Office leasing strengthened slightly.

Some landlords reported an increase in rent payment issues as tenants struggled with rising

costs. Plans for new construction projects were held back because of tighter availability of mate-

Federal Reserve Bank of San Francisco

rials, increases in costs of some inputs such as steel and lumber, and elevated financing costs.

Contractor quotes also rose, reportedly driven by existing and anticipated tariffs. Construction

activity remained solid for public projects such as infrastructure.

Financial Institutions

Lending activity was steady. Reports indicated that business clients continued to place most plans

for new borrowing and investment on hold in response to ongoing economic uncertainty. Demand

for consumer loans, including mortgages, remained generally subdued due to elevated interest

rates. Competition for deposits eased of late, and deposit flows were steady. Credit and asset

quality were reportedly high despite some uptick in consumer loan delinquencies.

For more information about District economic conditions visit: https://www.frbsf.org/

research-and-insights/publications/san-francisco-fed-twelfth-district-beige-book/.

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