Beige Book Report: Atlanta
September 3, 2025
Summary of Economic Activity
The Sixth District economy declined slightly since the previous report. Labor markets remained unchanged as most firms kept headcounts flat; wage pressures moderated further. Prices increased moderately. Employers' job requisitions at workforce intermediaries fell, requests for food assistance at direct service providers rose, and organizations relying on federal funding were faced with restricted cash flow. Consumer spending softened. Leisure travel slowed, and business travel was flat. Home sales ticked up slightly, inventory levels moderated, and home values declined, especially in Florida. Commercial real estate activity fell slightly. Demand for transportation slowed; manufacturing activity also fell. Lending increased, on net, even amid tightened standards. Energy activity expanded at a modest pace.
Labor Markets
Sixth District labor markets remained unchanged over the reporting period. Firms maintained a reluctance to hire given economic uncertainty and softening demand conditions, and some continued to welcome attrition in their workforce. Most contacts shared plans to keep headcount flat for the remainder of the year. Some businesses continued to note challenges around hiring for technical roles, but overall, firms reported an abundance of applicants for most positions. Concerns around immigration policy persisted, even though material impacts have yet to be seen in the aggregate. Some firms paused hiring plans or were considering scaling back on plans to increase staffing levels because of a recent pullback in federal spending.
Wages were broadly unchanged over the reporting period.
Prices
Prices rose moderately over the reporting period. Some contacts reported recent price increases on final products as pre-tariff inventories were depleted. Cost pass-through was more difficult for small businesses, forcing many to make cost-cutting decisions, including changes in product offerings and reduced labor hours. In construction, rising input prices for steel, aluminum, and concrete were partially offset by stabilizing labor costs as worker availability increased amid slowing pipelines. More broadly, sourcing contracts frequently included or are expected to include tariff clauses, adding to uncertainty about firms' future expenses. Many contacts expect to realize inflationary impacts from tariffs through the second half of this year and into 2026, and even those with little or no tariff pressure anticipate increasing prices to offset other costs.
Community Perspectives
Several workforce intermediaries reported continued signs of a weakening labor market, including fewer job requisitions from employers, and smaller employers increasingly opting for contract labor. Against a backdrop of constrained organizational resources, direct service providers noted increased demand for food assistance. Community development financial institutions and small business support providers observed a rise in business owners utilizing personal and other high-interest debt to cover elevated operating costs as well as the purchase of inventory in anticipation of higher costs due to tariffs. Federal funding volatility, including delayed disbursements, cuts, and clawbacks, has resulted in restricted cash flow for organizations providing employment, food, housing, and small business supports.
Consumer Spending
Consumer spending declined somewhat over the reporting period. Online and luxury retailers noted healthy sales, while restaurants and home goods merchants saw further softening in demand as value-conscious consumers continued to trade down. Some retailers expressed concern over further declines in demand in the coming months, as prices may increase after pre-tariff inventories are depleted. Automobile dealers experienced an increase in demand for parts and service as consumers chose to keep their vehicles longer. New car sales were flat to down.
Demand for leisure travel declined slightly since the previous report, on net, mostly driven by a pullback from price-sensitive travelers and international visitors. Hotels in some markets experienced lower-than-expected occupancy rates even with discounts and promotions. The pace of bookings for group travel slowed and contract decision timelines lengthened amid heightened requests for concessions. Business travel remained flat over the reporting period. Travel and tourism contacts were cautiously optimistic about the fall and holiday travel season ahead.
Construction and Real Estate
Home sales ticked up slightly over the reporting period, owing to a slight moderation in interest rates combined with reduced market values of existing homes, as well as discounts and other incentive offers from builders. Florida saw the most meaningful price corrections, with a sharp drop in sales prices. Across the District, existing home inventory levels moderated as homeowners delisted properties rather than sell at a discounted price. However, consumer credit quality and lack of affordability contributed further to slowing demand.
Commercial real estate activity declined slightly, with most sectors noting rising vacancy rates. As businesses continued to escalate in-office postures, demand for "highly amenitized" office space helped to stabilize class A properties, while others explored converting some office buildings to hotel or industrial space. Industrial property sales were healthy, though a slight increase in demand could not stave off increasing vacancy rates, or outpace new development. Oversupply in multi-family persisted, driving further rent concessions. Retail conditions weakened, as small businesses hit hardest by inflationary pressures requested reduced rent or other assistance from property owners. Retail property sales, however, were steady.
Transportation
Transportation contacts reported a modest decline in demand across the sector. While railroads reported notable increases in intermodal freight, attributed to growth in market share and lower year-earlier comparisons, industrial carloads were described as sluggish amid a recent deceleration in chemicals and metals shipments. Housing-related and auto shipments were also down. Container volumes at southeastern ports continued to grow, with some reporting notable year-over-year increases. Trucking firms noted softness in consumer and industrial-driven freight, though freight movements for data centers and alternative energy projects were strong for some firms. Expectations are for a soft peak shipping season this year, as contacts' sentiment was clouded by tariff uncertainty and the potential for a slowing economy.
Manufacturing
Manufacturing activity declined modestly over the reporting period. Housewares, beverages, and chemicals producers noted weaker orders and sales, partially attributed to ongoing uncertainty surrounding trade policy. Demand for exports slowed, and backlogs of unfinished work declined. Some manufacturers shared strategies for shifting supply chains, such as sourcing domestically. The manufacturing outlook for the Sixth District deteriorated as contacts reported downward revisions to forecasts amid rising input costs, tariff uncertainty, a cautious consumer, and slowing global trade.
Banking and Finance
Loan growth across the District increased modestly even as several bankers reported tightened lending standards. Construction and consumer lending contracted while other portfolios saw growth. Capital investment slowed as firms exercised caution amid uncertainty, but credit line utilization increased, particularly for small businesses. Some banks noted weakness in Small Business Administration lending, attributed to heightened uncertainty around federal support programs. Delinquency and charge-off levels remained low by historical standards, and capital ratios were stable.
Energy
Energy activity grew at a modest pace. Liquefied natural gas production and exports remained robust over the reporting period. Electricity demand growth was led by the commercial and industrial sectors, driven largely by data center demand. Chemical manufacturers described flat to softening demand, particularly for compounds used in the production of consumer paper and pulp products. Oil and gas contacts noted that while domestic crude oil production was stable, many expect production to decline by year-end.
For more information about District economic conditions visit: https://www.atlantafed.org/economy-matters/regional-economics.