Fed’s Beige Book Finds Growth Flat, Uncertainty Rising

The Federal Reserve’s latest Beige Book paints a familiar picture of an economy searching for direction, one defined less by momentum than by hesitation. In the 56-page report released Wednesday (Oct. 15), the word “uncertainty” appears 40 times, while “optimism” surfaces only 13, a linguistic snapshot of how both businesses and consumers are feeling about the months ahead.

Mixed Signals Across Districts

Economic activity across the 12 Federal Reserve districts showed little change overall. Three districts reported “slight to modest growth,” five saw “no change,” and four noted a “slight softening,” a step back from prior reports’ more encouraging tone. The report points to a growing list of headwinds, including tariffs, a slowing consumer, and a recent government shutdown, all contributing to what it calls a “clouded mid-term outlook.”

While none of these issues alone is new, together they suggest that the economy’s post-pandemic resilience is giving way to fatigue. The mixed regional readings show how fragile confidence has become, whether among manufacturers, service providers or consumers themselves.

Labor conditions were mostly stable, but that steadiness hides signs of strain. Five districts reported “unchanged” job conditions, while four described a worsening trend, often tied to “layoffs and attrition.”

The report observed that employers are holding off on new hiring amid weaker demand and rising costs, even as some sectors, notably healthcare and logistics, continue to struggle to fill skilled positions.

Those mixed dynamics help explain why the Beige Book highlights muted wage pressures. Firms appear reluctant to raise pay in an environment where price adjustments are constrained and revenues are uncertain. As one district put it, the prevailing tone is “wait and see.”

Trading Down and Holding Back

Spending trends are following a similar script. “Overall consumer spending, particularly on retail goods, inched down in recent weeks,” the report said, noting that lower- and middle-income households are “seeking discounts and promotions in the face of rising prices and elevated economic uncertainty.”

Higher-income households remain more resilient, with travel and leisure spending still holding up. But the imbalance underscores a broader shift in consumer psychology, one marked by caution and selectivity. Even where spending is steady, merchants report “rising input costs and limited ability to adjust selling prices,” a squeeze that is weighing on margins and sentiment alike.

The district-level breakdown illustrates how widespread the caution has become. Boston, Philadelphia and Richmond reported “slight increases” in output, while New York, Minneapolis, Kansas City and San Francisco noted slight decreases. Chicago, St. Louis, and Dallas were largely unchanged. Consumer activity tracked those same contours, with “slight declines” outnumbering gains.

The accompanying PYMNTS Intelligence analysis detailed in the chart below of sentiment across all 12 banks showed more districts registering “somewhat negative” views on consumer spending than positive ones (seven versus five) while neutral or mixed signals rose sharply. Across all metrics, the data tilt toward stagnation.

That alignment across sectors may be the most important signal in this Beige Book cycle: a rare convergence between Main Street and corporate boardrooms in their shared hesitation. Neither expects a near-term rebound, but neither forecasts collapse, just a slow grind forward in an economy that feels suspended between progress and pause.

This pessimism towards economic conditions is neither new nor limited to business stakeholders. Recall that, as recently reported by PYMNTS, provisional October data from the University of Michigan’s Consumer Sentiment Survey, shows a decrease of 22% in their measure of consumer spirit, only 5% above the 33-month low point registered in April. Within, the expectations subindex continued to fall, with its current level 30% below that of December 2024. The present index, in turn, stands 18% below the level of December 2024.

The report’s overarching theme is equilibrium; not of strength, but of stasis. Economic activity “changed little on balance,” the Fed noted, reflecting more drift than direction. While the underlying fundamentals remain intact, the prevailing mood is one of vigilance rather than confidence.