November 26, 2025
Summary of Economic Activity
The economy of the Sixth District remained unchanged, on balance. Employment levels were flat, and wages rose modestly. Prices increased at a modest pace. Low- to moderate-income consumers showed further signs of financial stress, and charities reported increased demand for assistance. Retail sales declined modestly, and travel was flat to down slightly. Home sales fell slightly, but commercial real estate conditions improved somewhat. Transportation demand was flat overall. Manufacturing activity was flat to up slightly. Energy activity continued to grow at a moderate pace.
Labor Markets
Employment levels remained flat over the reporting period. Firms experiencing robust demand continued to increase head count, noting an abundance of candidates and little difficulty hiring. Turnover remained low. Some contacts reported replacement hiring only, and others, while not implementing reductions in force, froze hiring altogether. A few large firms in wholesale distribution and hospitality shared recent layoffs, and some other businesses were planning for potential layoffs depending on future demand. Several firms reduced workers' hours to avoid layoffs or shifted from full-time equivalent employees to contractors to provide flexibility as demand fluctuated. Impacts from immigration policy remained subdued. Wage growth remained modest, in the low single-digits.
Prices
Prices rose modestly over the reporting period, on net. Construction costs stabilized, with reported declines in the costs for inputs like lumber and steel, partially attributed to slowing project pipelines. Costs for software and insurance were frequently cited as rising notably. Some contacts continued to report inflationary effects from tariffs on input costs but passthrough to final prices was minimal. Smaller businesses have found little ability to negotiate with suppliers alongside limited pricing power. Alternatively, larger firms have been "sharing the squeeze" on margins through the supply chain, with various suppliers absorbing portions of the tariffs. However, many firms have exhausted cost-cutting methods and plan to implement price increases in the coming months by targeting increases toward products with stronger demand to minimize broader demand erosion. Several contacts expect trade policy resolution in early 2026 that could provide clarity on cost and pricing structures.
Community Perspectives
Many low- and moderate-income households have exhibited increasing signs of economic distress. Bankers noted customers' increasing reliance on debt to cover typical household expenses like food and utilities. Nonprofits reported an increase in requests for service referrals, especially in areas of housing, food, and employment assistance. Recent funding cuts and uncertainty have contributed to the decision of many nonprofit service providers to lay off staff, reduce operations, and prioritize short-term strategies over longer-term planning. Additionally, the federal government shutdown resulted in disruptions to multiple social services programs. For example, some states used state resources to continue paying Supplemental Nutrition Assistance Program (SNAP) benefits while also furloughing workers serving SNAP recipients, and philanthropic organizations provided bridge loans to ensure continuity of local Head Start programs. Small business owners reported a pause in Small Business Administration loan applications.
Consumer Spending
Retail sales declined modestly. Lower- and middle-income consumers continued to exercise caution with discretionary spending. Higher-income consumer spending remained resilient. Restaurant groups reported that fine dining sales moderated as patrons traded down, and quick service restaurants saw a notable decline in sales, including on-demand food delivery orders. Automobile dealers experienced a modest decline in new vehicle sales, mostly concentrated in electric vehicles (EV) following the expiration of the EV tax credit. Expectations for holiday sales were generally positive but reliant on a bounce back of consumer confidence.
Overall travel activity was flat to slightly down. Business and group travel remained flat, leisure travel fell, and travel to the District from international visitors was muted. Average daily rates and hotel occupancy were down from last year amid diminishing consumer confidence and a further pullback in discretionary spending. However, contacts also attributed these declines to year-earlier comparisons of robust bookings during Taylor Swift's Eras Tour in parts of the District, as well as higher occupancies resulting from people displaced by, and those involved in the recovery efforts of, Hurricanes Helene and Milton. Hospitality contacts expect that major sporting events and festivals within the District will drive tourism in the coming year.
Construction and Real Estate
Overall home sales declined slightly. Existing home inventory levels remained above recent averages. Moderating home prices and lower interest rates only slightly improved demand. The move-up segment exhibited stronger demand than entry-level homes, though an increase in contingent offers reflected weaker conditions in the resale market. Homebuilders reported that improved buyer sentiment has not translated into increased sales, even as they maintained incentives like rate buydowns and price cuts. However, they were optimistic that continued declines in interest rates would motivate buyers during the peak selling season in the spring.
On net, commercial real estate conditions improved marginally. Office, multifamily, and some industrial vacancy rates fell, and demand for retail space was resilient amid growing capacity. The office sector saw modest increases in sales and new construction, with growing demand for Class A properties resulting from widespread return-to-office postures. Rents in the multifamily space were compressed further as vacancy rates, though improved, remained elevated.
Transportation
District transportation activity was flat. Most contacts reported a lackluster peak shipping season. Volumes for trucking firms declined further. Short-line rail contacts indicated that demand was relatively flat compared with year-earlier levels. Class I railroads, however, saw robust intermodal freight volumes and increases in total traffic year-over-year. Demand for logistics firms was flat. Several District ports noted strong container volumes but a drop in auto shipments. Inland waterway activity remained strong amid growing coal exports and domestic steel shipments, while grain exports slowed.
Manufacturing
District manufacturing activity was flat to slightly up. Specialty metals producers saw small year-over-year increases in demand and expect further improvement in 2026, while steel manufacturers reported solid activity overall with some softness in orders amid continuing economic uncertainty. Some food products manufacturers reported flat demand but anticipate softening in 2026 as new regulations related to artificial dyes are rolled out. Demand for producers of construction-related materials slowed because of declining housing starts and flat growth in commercial projects. Many manufacturers expect activity to remain largely unchanged over the next year.
Banking and Finance
Loan growth in the District decreased slightly, with declines in the construction and auto segments being partially offset by marginal growth in credit card and multifamily portfolios. Bankers reported tighter underwriting, particularly around construction lending, resulting in fewer closings. Commercial lending remained subdued. Third quarter data showed delinquencies fell overall, though one third of financial institutions reported an uptick. No bank mergers were announced over this reporting period, but markets expect increased merger activity in the near term.
Energy
Energy industry segments grew at a moderate pace overall. Crude oil and liquefied natural gas (LNG) production and LNG exports remained stable over the reporting period. Petrochemical manufacturers and crude oil refiners noted slowing investment due to uncertainty and increased costs associated with tariffs. Contacts reported strong demand for primary energy sources, particularly LNG, solar, and wind, and they attributed the strong demand to data center activity, which is expected to continue over the medium term.
For more information about District economic conditions visit: https://www.atlantafed.org/economy-matters/regional-economics.