Beige Book Report: New York
September 3, 2025
Summary of Economic Activity
Economic activity in the Second District continued to decline slightly as tariff-related uncertainty continued to weigh on businesses. Employment in the region was mostly unchanged during the reporting period, and wage growth remained modest. Selling prices rose at a moderate pace, marking some acceleration since the previous period. Input prices continued to rise at a strong pace. Manufacturing activity picked up modestly following a prolonged slump. Activity in the service sector declined at a moderate pace. Consumer spending increased slightly. With demand remaining solid, housing markets were steady across the District. Businesses were slightly pessimistic about the outlook.
Labor Markets
Employment in the region was mostly unchanged during the reporting period. Firms in information, construction, and education and health reported a decline in headcounts, while personal services firms as well as wholesalers reported some growth in employment.
Labor supply continued to exceed demand in many industries. With heightened uncertainty, businesses are still in wait-and-see mode and have been reluctant to meaningfully reduce or expand their workforces, and larger businesses in particular have been less willing to make commitments. An employment agency in upstate New York reported that jobs were harder to get; workers were staying put, and attrition remained extremely low. Still, workers remained somewhat hard to find in some industries, particularly in manufacturing and healthcare, as well as construction, where a decline in immigrant labor has begun to lead to project delays. Some employers shifted to four-day workweeks to retain workers. There were no signs of major layoffs in the region.
Wage growth held steady at a modest pace. Firms in construction and in leisure and hospitality saw strong growth in wages, while wage growth in finance and transportation remained more tepid. Contacts anticipated continued modest wage growth in the coming months.
Prices
Pricing pressures continued to rise during the reporting period, driven mostly by tariff-related costs. Selling prices rose moderately, marking some acceleration since the previous period. Input prices continued to rise at a strong pace. Multiple contacts reported a significant rise in insurance and utility costs. So far, there has been little impact on new car prices from the tariffs due to exemptions and implementation lags, with some manufacturers absorbing increased costs. An importer of European stainless steel used in the auto and aerospace industries reported passing on the full cost of the tariffs to customers, and a shipping company noted customers were importing European steel that just became more expensive with higher tariffs and no alternative domestic suppliers. An IT provider noted that their input costs were starting to increase as they ran out of supplies purchased before tariff increases. Several businesses reported that they planned to hike prices to cover the higher cost of tariffed inputs. Contacts increasingly anticipated a pickup in the pace of price growth in the months ahead.
Consumer Spending
Consumer spending increased slightly. Still, contacts reported that consumers were being squeezed by rising costs of insurance, utilities, and other expenses, limiting their discretionary income. Low home sales reduced household shopping for home improvement products and furnishings. Alcohol sales were slow during the summer. A restaurant in upstate New York noted higher customer counts but lower average spending. Upstate New York auto dealers reported a modest sales rebound from a summer slowdown that followed a spring surge to avoid potential tariffs.
Manufacturing and Distribution
Manufacturing activity picked up modestly following a prolonged slump. New orders and shipments increased modestly. However, uncertainty and volatility related to tariffs and trade policy continued to weigh on firms, with many delaying decision-making and strategy-setting. One regional manufacturer reported significant delays in receiving inputs from a U.S. supplier that was exceedingly busy due to firms shifting purchases to domestic sources. A wood products manufacturer in upstate New York reported a sharp decline in sales to Canada, while shortages of pine logs resulted in a mill stoppage, even with solid demand for pine products. Wholesale and distribution-related firms saw slight increases in business activity. One contact noted that trucking rates remained lower than normal as sagging demand forced trucking companies to lower their rates. A coffee roaster reported that tariffs on Brazilian coffee and on other supplies were creating shockwaves through the supply chain. A wholesale firm in New Jersey noted a sharp decline in capital purchases from local governments. Delivery times lengthened, and supply availability worsened slightly. Inventories declined. A trade contact noted that forthcoming restrictions on Chinese-built ships is expected to constrain shipping capacity. Manufacturers anticipated modest growth in the months ahead.
Services
Activity in the service sector declined at a moderate pace. There were more significant declines in retail and in leisure and hospitality, as well as in the education and health care sectors.
Tourism activity in New York City picked up slightly. Visits from overseas travelers remained sluggish, partly due to a reduction in Canadian visitors, but domestic tourism stayed solid. In spite of high hotel occupancy and record daily rates, attendance at attractions continued to lag, and Broadway ticket sales were somewhat weaker than earlier in the summer. The outlook for next summer is more positive, with the World Cup expected to draw large numbers of both international and domestic visitors to New York City.
Real Estate and Construction
Housing markets were steady and demand remained solid. Supply has been increasing slowly, but with ongoing strong demand, prices have continued to rise in most parts of the District. Sales were steady, with supply still a limiting factor in the New York City suburbs and upstate New York. Bidding wars pushed many sales prices above asking price. Luxury home sales remained brisk, particularly in the Hamptons, where high-end buyers, often using cash, were less affected by high mortgage rates.
The New York City rental market continued to reach historic highs this summer, with momentum from robust demand and a bump from the recent implementation of a new law governing broker fees on rental units.
Commercial real estate markets showed ongoing improvement, despite lingering uncertainty and concerns about potential longer-term challenges. A commercial real estate contact noted that leasing activity in New York has surged with significant new and renewal leases, leading to reduced vacancies and stable asking rents. Major deals from prominent companies have driven record high rents in Class A Midtown office space. Industrial demand remained strong in Northern New Jersey, with a surge in leasing for warehouse and distribution space. Building sales declined in New York City, although there have been some positive signs in recent weeks. Construction activity continued to decline.
Banking and Finance
Activity in the broad finance sector continued to pick up after a prolonged slump. Still, small-to-medium-sized banks in the District reported weakening loan demand and shrinking deposits. Banking contacts reported that credit standards had eased for all loan types, including business loans, consumer loans, and both commercial and residential mortgages. Delinquency rates generally improved since the last reporting period, but an auto industry expert noted an uptick in repossessions.
Community Perspectives
Many rural areas are underserved by healthcare professionals, including nurses, doctors, and support staff, and funding constraints are likely to exacerbate existing shortages. Community leaders anticipated that upcoming changes to Medicaid may cause reductions in health care services more broadly, including hospital closures, as well as a greater number of uncompensated services. Additionally, community leaders expected the new work requirements for Medicaid recipients to exacerbate existing childcare shortages.
For more information about District economic conditions visit: https://www.newyorkfed.org/regional-economy.