Beige Book Report: Atlanta
July 16, 2025
Summary of Economic Activity
The economy of the Sixth District was little changed over the reporting period. Labor markets remained stable as most firms kept headcounts level; wage pressures remained muted. Prices rose moderately amid continued economic uncertainty. Retailers and restauranteurs experienced softening demand. Travel and tourism grew modestly. Sales of new and existing homes slowed, and housing inventories rose significantly. Commercial real estate saw a moderate decline in activity. Transportation activity rose modestly, but manufacturing was flat. Loan and deposit growth was relatively unchanged. Energy activity grew at a moderate pace.
Labor Markets
Labor markets remained relatively unchanged over the reporting period, with most firms holding headcount flat. Contacts continued to describe a reluctance to hire given economic uncertainty and softening demand. Some trucking firms implemented reductions in force to align with slowing demand; however, most firms expect to maintain current staffing levels throughout the rest of the year, and some plan to allow for attrition as they wait to see how the economy develops. Turnover remained low, and contacts generally reported an ample supply of available workers. Overall, wage pressure remained muted amid less turnover and solid labor availability.
Prices
Prices rose at a moderate pace. Many businesses reported inflationary concerns surrounding the direct and indirect effects of trade policy and related uncertainty. Firms with exposure to tariffs continued to describe various approaches to cost pass-through, such as sharing tariff-related cost increases with both suppliers and customers. Some businesses have raised prices ahead of imposed tariffs. Others said they were waiting to raise prices until they had more clarity on trade policy, which puts pressure on margins but minimizes price volatility. Several contacts noted they were still working through pre-tariff inventories, thus delaying price adjustments. Contacts continued to reconfigure supply chains amid trade turmoil but noted difficulties executing plans given the uncertainty around final tariff levels for different countries.
Consumer Spending
Consumer spending declined slightly since the previous report. Retailers saw further softening in demand as shoppers, especially lower-income consumers, became even more value conscious. Many merchants who were still selling off pre-tariff inventories expect demand to erode if, or when, tariff-related price increases are implemented. Restaurants reported depressed volumes as increasingly value-conscious consumers traded down or opted to eat at home. Demand for services was reported as steady, with experiential spending outpacing goods purchases.
Travel and tourism activity grew modestly, on balance, since the previous report. Although travelers' booking windows and average lengths of stay have shortened, hoteliers were optimistic about summer leisure travel as reservations picked up closer to travel dates. Several major cities in the Sixth District saw hotel occupancy gains while hosting the 2025 FIFA Club World Cup. However, group bookings for some properties did not meet expectations as international travel to the U.S. from Canada, Asia, and Europe, continued to slow. Demand for cruises rebounded from lows earlier this year.
Construction and Real Estate
While home sales in the District slowed modestly over the reporting period, existing home inventory levels rose sharply, especially in southwest Florida. Home prices remained at or near record highs, but home price growth moderated or even declined. Homebuilders noted weaker sales, which had been primarily driven by the use of incentives, such as price cuts and rate buydowns. Builders also noted difficulties qualifying potential buyers as credit quality deteriorated.
Commercial real estate (CRE) activity declined moderately, on balance, in recent months. The office segment saw rising sales prices alongside moderate declines in transaction volumes; however, rents and vacancies were stable. Multifamily conditions remained mixed, with some areas of the District noting increased concessions on rents due to an oversupply of units. However, the pipeline for new properties, though slowing, remained healthy. Industrial markets experienced a pullback in activity, characterized by one industrial developer as "recession levels of demand" across the southeast, rising vacancies, and a corresponding drop in rents. Retail CRE conditions weakened, as both demand for space and sales declined.
Transportation
Transportation activity rose at a modest pace. Container traffic at District ports continued to increase, and some ports noted that bulk and break-bulk freight volumes were performing above expectations. Open hatch bulk carriers reported robust demand. Railroads saw slight declines in intermodal volumes since the previous report, but year to date, intermodal total traffic has exceeded 2024 levels. Trucking activity remained sluggish. Risks to the outlook included geopolitics, trade policy, and a broad economic slowdown that would impact demand for transportation services.
Manufacturing
Manufacturing activity was relatively flat over the reporting period. Contacts continued to highlight expectations for lower demand in the second half of the year since consumers pulled forward purchases earlier this year to circumvent tariffs. A few manufacturers reported robust pipelines. Auto manufacturers in the District noted solid demand. Plans for investment and for reconfigured supply chains were put on hold until manufacturers had further clarity on trade policy. Some food producers noted concerns around the cost of compliance and the resulting impacts to final prices as they implement new FDA regulations on food coloring and additives. The Atlanta Fed's June Business Inflation Expectations (BIE) Manufacturing Sector Report reflected higher sales levels and profit margins relative to the April BIE report.
Banking and Finance
Overall loan growth was flat as business investment stalled amid economic uncertainty and as banks tightened standards for both commercial and consumer lending. Deposit levels remained steady, leaving loan-to-deposit ratios unchanged. Bankers described increased household financial stress and rising credit card usage among customers. Delinquencies continued to tick up but remained at relatively low levels. Slowing demand raised institutions' concerns about some businesses' cash flow expectations and their ability to service debt.
Energy
Energy activity grew at a moderate pace. Contacts continued to report healthy global oil and gas demand. Liquefied natural gas production and exports remained robust. While demand for petrochemical products was strong, a contact described chemical production as overbuilt, creating some softness in the sector. Renewable energy contacts noted heightened uncertainty surrounding government incentives that slowed investment and caused projects to be delayed or cancelled. Rising geopolitical risk was often mentioned by industry leaders, though some described growing confidence in global efforts to avoid escalation.
For more information about District economic conditions visit: https://www.atlantafed.org/economy-matters/regional-economics.