U.S. economic activity increased at a “slight to moderate” pace in seven of the Federal Reserve’s 12 districts, while the remaining five reported flat or declining activity, the latest Beige Book showed, marking a modest deterioration from mid-January, when only four districts reported no growth or contraction.  

On balance, consumer spending edged higher, but two districts continued to see declines. The report noted that many districts saw sales held back by “economic uncertainty, increased price sensitivity, and lower-income consumers pulling back on spending,” with winter storms and immigration enforcement also cited as local drags on demand. 

Employment levels were broadly stable, with seven districts reporting no change in hiring. Prices continued to rise at a moderate pace, with eight districts citing moderate price growth and four describing slight or modest increases. Nine districts flagged tariffs as a key driver of higher costs; some firms have already passed tariff-related increases through to customers, while others are beginning to do so after previously absorbing them. 

On the upside, manufacturing activity improved overall, with eight districts reporting growth and two seeing declines, alongside stronger new orders. Financial services were described as stable to slightly stronger, led by commercial lending, while residential real estate remained constrained by affordability challenges and low inventories.  

Looking ahead, “overall, economic expectations were optimistic, with most districts expecting slight to moderate growth in coming months,” the Beige Book said. By district, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, Kansas City and Dallas reported increased activity, Boston and St. Louis were flat, and New York, Minneapolis and San Francisco saw declines.