The Fed’s Beige Book shows a weakening economy
Please consider the Fed’s Beige Book for July 2025.
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.
By Fed Region
- Boston: Economic activity was flat or up slightly. Retail revenues decreased modestly, and tourism revenues edged lower, in part because of fewer visitors from Canada. Price increases were modest overall, although tariffs drove above-average price increases in a few cases. Home sales increased modestly. Hiring plans remained conservative amid a guardedly optimistic outlook.
- New York: Economic activity continued to decline modestly as heightened uncertainty hindered decision making. Employment was up slightly and wage growth was modest. Selling price increases remained moderate, while input prices rose steeply with widespread tariff-related cost increases.
- Philadelphia: Business activity continued to decline modestly in the current Beige Book period. Activity fell moderately for nonmanufacturers but edged up slightly for manufacturers. Employment declined slightly, while wages increased slightly. Prices rose modestly after moderate growth last period. Generally, firms expect slight growth over the next six months, although economic uncertainty remains.
- Cleveland: District business activity continued to be flat in recent weeks, but contacts expected activity to increase slightly in the months ahead. Several manufacturers reported softer orders, and transportation contacts reported a steep decline in demand. Contacts said that cost growth remained robust while their selling prices only increased modestly.
- Richmond: The regional economy grew moderately in recent weeks. Consumer spending on retail, leisure, and hospitality increased at a modest to moderate rate. Business conditions were largely unchanged as firms across most sectors reported steady sales and demand. However, manufacturing activity contracted slightly with firms citing higher prices curtailing demand in recent weeks. Employment rose modestly and price growth remained moderate this cycle.
- Atlanta: The economy of the Sixth District was little changed. Labor markets and wages were steady. Prices rose moderately. Consumer spending softened, but travel and tourism increased modestly. Residential and commercial real estate activity declined. Transportation activity grew modestly. Loan growth was flat. Manufacturing was flat, but energy activity rose moderately.
- Chicago: Economic activity increased slightly. Employment increased modestly; consumer spending, business spending, and construction and real estate activity were flat; manufacturing declined slightly; and nonbusiness contacts saw no change in activity. Prices rose moderately, wages rose modestly, and financial conditions loosened slightly. Prospects for 2025 farm income were unchanged.
- St. Louis Economic activity has remained unchanged. Employment levels were generally unchanged. Prices continued to increase moderately, and most contacts continued to expect higher nonlabor costs in the coming months as a result of tariffs. The outlook among contacts remains highly uncertain and slightly pessimistic.
- Minneapolis Economic activity was flat overall. Employment grew slightly and wage growth was moderate. Price growth eased but manufacturers felt more acute pressures. Overall consumer spending was down but tourism activity increased. Construction and energy activity decreased while manufacturing and vehicle sales were flat.
- Kansas City: Economic activity in the Tenth District was mostly unchanged, with some rebound in consumer spending and financial activities. Labor availability was reportedly much higher, which lowered expected wage pressures for the remainder of the year. Prices rose at a moderate pace.
- Dallas: Economic activity in the Eleventh District economy was up slightly over the reporting period. Nonfinancial services activity grew modestly, and manufacturing production held steady. Loan volumes expanded, while oil production was flat, retail sales declined, and the housing market weakened. Employment was unchanged and price pressures held steady. Outlooks remained pessimistic.
- San Francisco Economic activity was largely stable. Employment levels were slightly lower. Wages grew at a slight pace and prices increased modestly. Retail sales expanded modestly, and consumer and business services demand eased. Conditions in manufacturing, and residential real estate markets weakened somewhat. Lending activity and conditions in agriculture were largely unchanged.
Economy at Stall Speed
I count three Fed regions up, and a fourth if you count Boston listed as “flat or up slightly”. Richmond was the standout. The Richmond area grew “moderately.”
New York and Philadelphia declined “modestly”
Add it all up and you have an economy at stall speed.
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Go back to 2023 when there was enough evidence of a recession but because of unemployment not being above 5%, no recession was announced.
The slowdown now is just a continuation of the economic slowdown in 2023.
(13) Real Money Supply Is Still Contracting — And Housing Is the Next Domino
We all know what happens when an airplane reaches stall speed. Especially if the pilot intentionally switches off the trade fuel switches.
And we all know that $2T in deficit spending is like a rocket motor strapped to the airplane.
Initial & Continued Unemployment Claims are still well below a recession threshold.
We are nowhere near stall speed. That’s just wishful thinking.
As posted twice on other related threads, $1.8 trillion in deficit stimulus resulted in $1.4 trillion increase in GDP yielding negative $400 billion efficacy for 2024. Deficit spending is no longer stimulative; it is a drag on the economy.
At some point, the system needs more and more money. I get that.
But we’re still a ways off from casting $2T as a “drag” on the economy.
Take the $2T away and then you’ll see a drag and then WAY, WAY, WAY more drag.
You are describing a facit of the pain we must go through to repair our economy. Absolutely I agree that pulling current deficit spend will hurt the economy more than continuing to deficit spend if one only looks at the short term. That short term kick of the can down the road just makes things worse for the future repair. It will keep getting worse till congress fixes the mess by spending less than the government takes in. Look at the example of the United States following WW! and the Spanish Flu pandemic where the federal government cut spending massively which caused pain before the roaring 20’s commenced. A modern example is Argentina. In both cases leaders put aside short- term fixes that exacerbated the underlying problem. Instead, patriotic leaders implemented long term policy change that addressed the root spending problem..
Three up, two down, everyone else stable.
A quiet summer, so a good time to take the mistress to the concert. 😉
Stocks just hit a ‘line of death’ last reached at the peak of the dot-com bubble, veteran investor Bill Smead warns
https://finance.yahoo.com/news/stocks-just-hit-line-death-173001872.html
Paul Volcker didn’t cut inflation. The oil glut was the pepper. Without black pepper the Fed will have to keep the front high until the toxic bubbles will decay to a manageable level. In the middle age the Dutch controlled the spice trade. The Scots controlled the tobacco trade. Demand was high, but only the rich could afford black pepper and other spices. Globalization cured the rich, but killed the poor. Globalization caused inflation and wars between GB and the Netherland which colonized Indonesia and Taiwan and treated the locals brutally. Real estate, Corp finance and car dealers like lower rates.
In other words: the rich can afford stuff, everyone else not so much. Not news.
When MPO45 saw 5% he loaded a bunch of them. The 3M dropped from
5% to 4%. If the 10Y will pop to 8%/9% MPO45 will load a ton of them in his yacht, The 10Y will drop to 6%/7%. Inflation hurts the poor, but especially the elderly who have to pay banks, insurance, taxes, house and cars repairs, docs, and pharma. The boomers have no clue.
How else can it be put? The economy is weak. I have no idea why consumption would be up in Richmond? All the money is north of it. Maybe in the throes of tariff pain, they all sold their Confederate money stashes and went to Sears.
If SPX decays JP – the fall guy – will cut rates fast. Persistent lower fund rates along with gravity with Germany and Japan will prevent the long duration from rising to reflect inflation. The yield curve is defective. Persistent rates below CPI yields negative dividends: 10Y x 35T debt x (-)2% ===> (-)7T. Lower rates, tariffs, a smaller gov, higher tax collection and negative dividends will reduce gov debt.
Once it’s done the Fed will raise the front end above the defective long duration
to avoid a 1929/32 event. The 3M = 12%. The10Y = 7%/8%. A country which was able to cut its debt has a strong currency. Since the Obama election the econ cancer proliferated. Our own immune system, instead of protecting us, attacked us in a cytokine attack.
FWIW most of the inflation is due to black money entering the US from China, India and Russia over the last 10 years. All three of those governments instituted polices which caused money to flee the banks in those countries. The world is awash in dollars now and this is what is the cause of inflation. The Fed needs to start reducing the money supply.
Trump recession. Powell would have cut rates by now if not for the economic uncertainty caused by Trump. Prices falling on everything but it feels more like 2013 again.
Powell’s fault.
Too obvious.
POWELL’S FAULT
Even the child can see.
QUICK! LOWER INTEREST RATES!!
Yes all the way to 1.0 percent
So who is going to want to buy treasuries anymore?Specially with the dollar falling down…
Good point. 5 years ago banks gobbled them up and look what happened when yields rose: 13 bank failures. But hey, that’s why the Fed is operating as the MMT-based lender of last resort to hoovering up all those low yield / high priced treasuries.
My bet is that the bond market will revolt which is the #1 reason why Bessent talked Trump down from ditching Powell.
The question is will the rising inflation turn the other direction as we approach May of 2026.
Are you sure banks gobbled them up? They can park all their money at the Fed and earn a risk free return so there is no need to buy treasuries.
The ones that failed did.
When you have such a pile of debt,it’s almost impossible to raise rates.
To moderate inflation,you can promote zillions of crypto currencies where you can park excess liquidity.
Anyone who runs a trade surplus with us must buy treasuries since that’s how the math works.
Agree,except it’s not maths only.It’s the way Trump is putting pressure on countries with the tariffs.On the other hand tariffs are killing surpluses…
In FED speak translated to the real world, business margins are decreasing so layoffs are coming.
Real sales are flat or down.
Businesses are optimistic about the future because we have to be due to too much inventory and/ or service backorders are filled quicker than in early 2009. What else can a business say but it has to get better because today it is bad.
The silver tsunami is minting 11,000 seniors every day. Even if just half are leaving jobs, that’s a mass exodus already.
One word describes this: STAGFLATION
I’m just asking the question.
If CPI makes it to 3% soon and inflation moves back up towards 3%, can we call that stagflation?
In the 70’s GDP growth was 1-1.5% while inflation ballooned from about 4.5% in the first half to the high single digits by the end of the decade. Now, that sounds like stagflation.
Nowadays, if CPI & inflation stay within 1% of each other, can we call that stagflation?
As I’ve said many times of late, with the huge deficit spending, I don’t see how GDP will dip below 2% unless TACO gets out over his skies with tariffs 10 days from now & throughout the rest of the year.
And without a recession, companies continue to have ample reasons / “opportunity” to continue to raise prices, so I don’t see how CPI heads south anytime soon.
If they continue to move in parallel, then that seems more like equilibrium to me, but I would expect CPI to outpace GDP, which is not the right ratio for consumer price relief.
The 70’s were brutal, particularly for the rust belt. We probably had 12 years of the worst economy since the depression, and it was a similar depression in the industrial basin. My home county sported a 25% unemployment rate, and those unfortunates paid the inflated prices that were everywhere. I’m glad I relocated!
I was a kid in the 70’s, so I really didn’t understand what was going on.
However, by the time we approached the mid 70’s, the CPI to GDP ratio was about 3.0. By the time we the end of the decade arrive, it was about 6.0. That’s an enormously different situation than what we’ve got right now. For the past year, inflation CPI to GDP ratio has been in the ballpark of 1.0 or a little less.
The major difference / problem is & will remain home & rent prices & the lack of a recession to correct this major imbalance & others. Both of these metrics are out of whack compared to the 70’s. Homeowners must pay their property taxes. In addition, unless you own your home outright, then you have to carry insurance in high-risk areas like FL. Then you see high home repair services inflation which all combined has made home affordability the single most important economic issue in the US. And in a perverse sense, it’s slowly transforming the lower tier of homeownership into a rental only scenario which will hurt lower income families even more.
From the mid 70’s through the early 80’s or about 5-6 years, we had two recessions, which again correct these problems.
The Fed & Congress exist today to either stop or blunt possibility or effects of recession. So, we’ve entered into the ever-expanding asset bubble that is only going to end when something very bad happens.
IMHO, we’re not in a stagflation period yet.
In 1919/21 we had a severe recession, but Ford sold over a million cars in 1920/21. In the 80’s we had two recessions, but oil co boom lifted SPX.
Cuyahoga?
My first sentence was meant read:
If CPI makes it to 3% soon and GDP moves back up towards 3%, can we call that stagflation?
Will not happen
It all looks unchanged to me. Much ado about nothing. Economic activity slowing and inflation on the horizon…
The bond market seems to have things about right?
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And all this time I thought “flat” “stable” and “unchanged” were pretty much the same thing.