Beige Book Report: St Louis
June 4, 2025
Summary of Economic Activity
Economic activity has remained unchanged since our previous report. Employment levels were unchanged, and wage growth has been modest. Prices continued to increase moderately, and most contacts expecting higher nonlabor costs due to tariffs indicated they would pass the costs along to customers. Contacts expressed a high degree of uncertainty and concerns that tariffs would result in further cost increases. Heavy rains and storms have resulted in planting and construction delays and lower traffic to some recreational businesses. Tornados in St. Louis have resulted in casualties, power shortages for several days, and the destruction of many properties. The outlook remains slightly pessimistic, with signs of continued deterioration.
Labor Markets
Employment has remained unchanged since our previous report. Most contacts indicated their staffing plans had not changed since the start of the year. A manufacturer in Indiana reported that, despite slower business, they were still hiring; however, hours worked decreased and overtime hours were no longer needed. Another manufacturer reported they were expecting employment levels to remain constant; however, they were reducing their temporary workers in favor of more full-time workers. A construction company reported that, while they were not planning any staffing cuts soon, they were making contingency plans in case business conditions worsened.
Wage growth has been modest, and most contacts have not expressed concerns about wage pressures. A contact from Arkansas reported that despite cost increases they would not be raising wages until the end of the year. A recreational business in Missouri reported that wages had increased due to increases in the minimum wage.
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. Most contacts expecting nonlabor costs to increase next quarter reported that they would pass along the costs to customers within three months. A manufacturer reported they had modified their receipts to display a 7 percent increase in cost due to tariffs, but that this line could easily be removed if tariffs were no longer in place. A hotel owner reported that vendors have warned of cost increases due to tariffs but have not yet published new prices. A professional services firm reported that they were facing cost increases; however, there was lower consumer acceptance of increased prices. A food manufacturer in Kentucky reported that their costs had increased due to avian flu, as eggs and chicken were components of their food mix.
Consumer Spending
Consumer spending reports were mixed. Recreation and hospitality contacts reported, on net, a slight increase in activity. A restaurant owner in Louisville reported that they were expecting sales to continue to grow and were spending on capital improvements in their restaurants. Another restaurant owner in Kentucky noted that customers were coming to dinner, but they were skipping the appetizer and dessert. Retail sales have slightly declined, especially for discretionary items. Several retailers reported that sales have been below expectations, with customers being cautious with their spending. One retailer reported that food and consumable sales remain stable, while general merchandise sales have been weak, resulting in higher inventories of these items. Auto dealers reported no change in sales. A Missouri dealer reported that higher-end vehicle sales were significantly lower and buyers were paying cash for those vehicles instead of financing.
Manufacturing
Manufacturing activity has slightly decreased since our previous report. Manufacturers across the District reported that new orders had slightly decreased. One contact reported this had led to an overstocking of inventories. Contacts also reported a decrease in production and capacity utilization. However, a midsize food manufacturer reported that, while 30 percent of their overall production is exported to China, they had not yet seen any changes in ordering behavior. Some manufacturers are creating plans to regionalize their supply chains—that is, to source and produce within a specific geographic area, rather than relying on a global network.
Nonfinancial Services
Activity in the nonfinancial services sector has been mixed. Transportation and logistics contacts reported a slight increase in activity, particularly in international activity, while domestic activity has slowed slightly. A logistics contact from St. Louis reported that recent increased demand could be attributed to stockpiling to avoid higher tariffs in the future. Activity in the professional services sector has been mixed. An architecture business reported a slight weakening in their workload and a decrease in the demand for new projects. Similarly, another professional services contact in Memphis reported that their sales pipeline has diminished, which would negatively impact performance in the second half of the year. In contrast, an Arkansas firm reported their sales had exceeded expectations, as a major customer has placed several large orders.
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 prior years. Contacts reported that low inventory levels, uncertainty, and interest rates were the main factors impacting sales.
Commercial real estate activity has been mixed. A contractor reported that customers were trying to complete their projects sooner out of fear of higher costs, while others reported that new projects were not starting due to uncertainty and high costs. Contacts in St. Louis and Louisville reported that weather conditions had delayed or slowed construction and that projects dependent on government funding were also paused, with developers uncertain whether they would continue receiving funding to complete the projects.
Banking and Finance
Banking activity has remained unchanged since our previous report. Loan demand has slightly increased, but by less than was expected as of the previous quarter. A banker from Memphis reported that loan demand has been negatively affected by uncertainty, as it is very difficult to price goods and contracts. Bankers in Arkansas reported that they had seen an increase in commercial real estate and auto loan demand. Bankers across the District reported that, despite delinquency rates being relatively low, they expect consumer and commercial delinquencies to increase in upcoming months due to continued stress for consumers and expectations of a weaker economy.
Agriculture and Natural Resources
Agriculture conditions have remained unchanged since our previous report. Wet soil conditions continue to delay planting in some areas. Despite these delays, overall acres planted remain consistent with prior years. Contacts noted that continued delays accessing fields will result in a shift in planting away from corn and toward soybeans. Contacts expressed uncertainty over the cost and availability of feed ingredients and chemicals sourced outside the U.S. Demand for credit remains elevated; however, obtaining loans at affordable rates remains a top concern. A cotton industry contact expects demand from retailers will weaken over the next few months.
For more information about District economic conditions visit: https://www.stlouisfed.org/research/regional-economy.