Beige Book Report: Atlanta
October 15, 2025
Summary of Economic Activity
Economic activity in the Sixth District was little changed. Employment levels were flat, and wages rose modestly. Prices increased at a moderate pace. Consumer spending fell somewhat, and leisure travel continued to soften. Activity in residential real estate declined, though commercial real estate was generally unchanged. Transportation declined modestly, but manufacturing picked up slightly. Loan growth was flat across the District. Energy activity expanded moderately, and agriculture conditions were mostly healthy.
Labor Markets
Employment levels in the District were generally flat over the reporting period. Several firms described what one dubbed a "hiring chill," suggesting welcomed attrition and fewer head count additions in areas of growth. Turnover was low, with many describing the level as the lowest in their firm's history, and applicants for open positions were plentiful except for very specific, mostly technical, roles. Recently, however, head count reductions were cited more frequently, and some firms expect further cuts based on early Generative AI implementation results, particularly if demand slows further. Impacts from changes to immigration policy and enforcement were more material than previously reported but were concentrated in certain geographies like south Georgia and sectors such as agriculture and hospitality. Uncertainty around both labor supply and consumer demand continued to weigh on firms' hiring plans.
Wage growth was modest, in the one-to-three percent range, and wage pressures continued to ease.
Prices
Prices rose moderately. Firms noted a wide range of tariff impacts on operating costs and pricing responses, as well as approaches to managing those impacts, such as absorbing cost increases, negotiating with suppliers, and passing through to customers. Contacts warned that price pass-through resulting from tariffs has just begun and expect to see prices rise into 2026. Some auto manufacturers reported feeling the pinch from tariffs on new car sales but were absorbing these increases to prevent further declines in demand. Some firms, however, reported little to no tariff impacts thus far. A few service-oriented firms noted an ability to increase prices without pushback from customers. Steel prices flattened amid slower demand, but some producers held prices steady to preserve strong margins. Internal cost pressures continued to mount, and firms noted there was little room to cut costs further. The accelerated depreciation schedule from the One Big Beautiful Bill Act will help to offset cost pressures going forward according to several contacts.
Consumer Spending
Retail sales declined slightly over the reporting period. Some transportation carriers for major retailers reported these stores had lower same-store sales as compared with year-earlier levels, and that sales growth for the full-year 2025 would be flat. Some retailers were cautiously optimistic about the upcoming holiday sales season, but a few expect holiday sales to be "meh," and noted that tariffs may soon cause prices to rise, resulting in further softening of demand. At restaurants, diners continued to pull back by skipping desserts and/or alcoholic beverages. Automobile dealers experienced a robust surge in new electric vehicle (EV) sales ahead of the expiration of the EV tax credit.
Leisure travel activity declined slightly since the previous report. The volume of international visitors remained muted and domestic travel booking windows shortened. Hotel occupancy levels continued to trend downward, on net. Business and group travel were flat. Cruising remained the strongest segment, with ports reporting solid passenger volumes. Hospitality contacts remained guardedly optimistic about the 2025 holiday travel season.
Construction and Real Estate
Home sales throughout the District declined moderately. Realtors reported increased buyer hesitation as economic uncertainty weighed on buyers' decisions to purchase a home. Some contacts noted a deterioration in the credit profiles of potential buyers, making it difficult for many to qualify for a mortgage. Although balanced in most of the region, inventory levels remained elevated in many markets in Florida. Home prices remained near historic highs, but price appreciation moderated. Cost inflation on new home construction stayed relatively low amid declining sales. Muted demand for new starter homes persisted, while the luxury new home market remained resilient. Homebuilders reported an elevated level of speculative inventory.
Commercial real estate activity was little changed since the previous report, on net, amid uneven market dynamics. Despite increasing in-office requirements by employers, office vacancy rates increased somewhat as new supply outpaced demand. Industrial vacancy rates increased slightly even as inventory contracted due to demolished properties making way for higher-tech buildouts. While still elevated, multifamily vacancies stabilized, and rents moderated. In the retail sector, however, vacancy rates declined and demand for space was strong.
Transportation
Transportation activity declined modestly. Trucking firms reported persistent weakness in shipments of consumer goods, and some noted a recent acceleration in the pace of declines. Trucking capacity remained elevated. Declining short-line railroad activity was higher than forecasts—down by high single digits. Class I railroads saw notable increases in intermodal freight volumes, but year-over-year declines in total carloads. Ports continued to experience robust container volumes and steady breakbulk activity; however, auto shipments performed below expectations.
Manufacturing
District manufacturing rose slightly, on net, since the previous report. A couple of cosmetics producers reported solid demand and market share gains. Concrete manufacturers saw improved backlogs. Chemical manufacturers noted that demand for compounds used in chicken feed rose, but sales of paper and pulp were flat, and orders for components used in tires were described as lackluster. Producers of packaged snack products reported considerably lower sales volumes amid softer consumer demand and some moderate producer-driven price increases. Concerns over tariffs and rising costs remained prevalent among manufacturers.
Banking and Finance
Overall loan growth in the Sixth District was flat since the previous report. Loan demand from both corporate borrowers and consumers was muted amid persistent economic uncertainty. Overall consumer lending contracted further, even with a small uptick in HELOC applications. While banks reported healthy credit quality, delinquencies ticked up. Multiple bank mergers were announced, affecting the banking landscape across the southeast.
Energy
Most energy industry segments grew at a moderate pace over the reporting period. Crude oil production in the Gulf of Mexico remained strong, despite reports of continued softening demand for various refined products. Liquefied natural gas demand rose globally and U.S. exports remained robust. Electricity demand was solid, particularly in the commercial and industrial sectors. Carbon capture and storage projects advanced over the reporting period, while solar development projects slowed down.
Agriculture
While contacts noted that overall demand for agricultural products was healthy, trade policy volatility weighed on agricultural exports. Overseas sales of domestic rice declined as buyers sourced from other countries at lower prices. Crops such as soybean, wheat, and corn remained depressed while Chinese markets turned to Brazil for these commodities. However, domestic demand for beef, poultry, peanuts, and tobacco was strong. Dairy farmers noted flat year-over-year sales, though demand from food services providers (e.g. cruise lines, resorts, and restaurants) was "on fire," and retail dairy sales were stable.
For more information about District economic conditions visit: https://www.atlantafed.org/economy-matters/regional-economics.