National Summary
Overall Economic Activity
Economic activity increased slightly to moderately across the twelve Federal Reserve Districts in late November and December. Consumer spending moved up moderately, with most Districts reporting strong holiday sales that exceeded expectations. Vehicle sales grew modestly. Construction activity decreased overall, with several Districts indicating that high costs for materials and financing were weighing on growth. Manufacturing decreased slightly on net, and a number of Districts said manufacturers were stockpiling inventories in anticipation of higher tariffs. Residential real estate activity was unchanged on balance, as high mortgage rates continued to hold back demand. Commercial real estate sales edged up. The nonfinancial services sector grew slightly overall, with Districts highlighting growth in leisure and hospitality and transportation, notably air travel. Truck freight volumes, however, were down. Financial service providers reported modest growth in lending and little change in asset quality overall, though lenders and community organizations voiced concerns about delinquencies among small businesses and lower-income households. Nonprofit social service agencies faced high demand amidst uncertainty about future funding levels. Agricultural conditions remained weak overall, with generally lower farm incomes and weather-related struggles in some areas. The spread of avian flu reduced egg supplies and pushed up prices. Energy activity was mixed. More contacts were optimistic about the outlook for 2025 than were pessimistic about it, though contacts in several Districts expressed concerns that changes in immigration and tariff policy could negatively affect the economy.
Labor Markets
Employment ticked up on balance, with six Districts reporting a slight increase and six reporting no change. Contacts in several service industries, notably healthcare, continued to see job growth. Construction employment increased slightly, while manufacturing employment was flat. Contacts across multiple sectors noted difficulty finding skilled workers, and reports of layoffs remained rare. However, contacts in some Districts expressed greater uncertainty about their future staffing needs. Wage growth picked up to a moderate pace in most Districts, though there were some reports that wage pressures had eased.
Prices
Prices increased modestly overall, with growth rates ranging from flat to moderate. Contacts in most Districts reported modest increases in selling prices, though there were instances of flat or decreasing prices as well, particularly in the retail and manufacturing sectors. Input costs also rose, with contacts highlighting higher insurance prices, particularly for health insurance. However, as with selling prices, there were several mentions of flat or lower input costs, particularly for fuel. Contacts expected prices to continue to rise in 2025, with some noting the potential for higher tariffs to contribute to price increases.
Highlights by Federal Reserve District
Boston
Economic activity increased slightly, with modest increases in tourism activity and home sales, slight increases in retail sales, and relatively flat activity otherwise. Prices were mostly steady despite slight cost pressures for some firms. Employment was stable, and wages increased modestly. Expectations were optimistic on balance, although some contacts remained uncertain about the outlook.
New York
Economic activity in the Second District increased slightly during the reporting period. Employment in the region grew slightly. Consumer spending increased moderately, with stronger-than-expected holiday retail sales. Commercial real estate markets improved slightly, with growth in demand in New York City office markets. Selling prices continued to rise at a modest pace, although manufacturers reported that prices largely held steady.
Philadelphia
Business activity continued to grow slightly in the current Beige Book period. Auto sales led consumer spending with a modest increase. Manufacturers reported a slight decline in activity. Real wages and prices continued to rise modestly, and employment rose slightly. Inflation expectations rose over concerns about deficits, tariffs, and immigration. On average, firms expect moderate economic growth over the next six months.
Cleveland
District business activity grew modestly in recent weeks, and contacts expected activity to increase further in the months ahead. Retailers noted higher-than-anticipated sales, while manufacturers said that demand remained soft. Employment levels were generally flat. Overall, contacts indicated that wages and nonlabor input costs grew moderately, and prices increased modestly.
Richmond
The regional economy continued to grow modestly this cycle. Consumer spending and travel grew moderately over the holiday shopping and travel season. Financial services firms reported modest growth while demand for nonfinancial services was subdued. Manufacturing activity slowed slightly this cycle and port activity was mixed. Employment levels were unchanged, and price growth was moderate.
Atlanta
Economic activity in the Sixth District expanded modestly. Employment was steady and wages grew slowly. Input costs and prices increased modestly. Consumer spending grew moderately. Demand for housing increased modestly. Transportation activity grew slightly. Loan growth was moderate. Manufacturing declined slowly. Energy activity grew modestly, but agriculture demand fell.
Chicago
Economic activity increased slightly. Consumer spending increased modestly; employment increased slightly; construction and real estate was flat; nonbusiness contacts saw little change in activity; and manufacturing and business spending decreased slightly. Prices increased modestly, wages rose moderately, and financial conditions loosened some. Farm incomes in 2024 were below those of 2023.
St. Louis
Economic activity has continued to expand slightly since our previous report. Reports on holiday sales were positive and generally better than expected. Reports from other sectors generally reflected the typical seasonal slowdown. Many of these contacts shared a positive outlook for the year ahead.
Minneapolis
District economic activity grew slightly. Employment increased slightly while wage growth was moderate. Prices increased slightly overall with greater pressure on input prices. Retail contacts were generally upbeat about holiday sales, with some seeing sales surpass pre-pandemic levels. Manufacturing contracted modestly but contacts were somewhat optimistic for the year ahead.
Kansas City
Economic activity expanded slightly in the Tenth District, led by consumer spending. Contacts indicated consumers are increasingly using longer-term financing and consolidating debt to manage household cash flows. Contacts broadly reported expectations that economic growth, hiring activity and price growth will all accelerate in coming months, but also expressed concerns over potential policy changes.
Dallas
The Eleventh District economy expanded moderately over the reporting period. Growth resumed in the manufacturing sector and revenues rose in nonfinancial services and retail. In addition, bank loan volume and demand expanded. Home sales increased slightly but energy activity was flat. Employment rose slightly, and wages and prices grew moderately. Outlooks continued to improve although concerns about anticipated changes in domestic policy remained elevated.
San Francisco
Economic activity expanded slightly. Employment levels and overall price levels were generally stable. Wages rose slightly. Activity in services sectors was steady to slightly up. Retail sales grew modestly. Activity in manufacturing and commercial real estate were varied, while the housing market and lending activity were steady. Conditions in agriculture softened slightly.
Note: This report was prepared at the Federal Reserve Bank of Chicago based on information collected on or before January 6, 2025, and thus, before the wildfires in the Greater Los Angeles area started. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.