November 26, 2025
Note: This report was prepared at the Federal Reserve Bank of Dallas based on information collected on or before November 17, 2025. This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials.
Overall Economic Activity
Economic activity was little changed since the previous report, according to most of the twelve Federal Reserve Districts, though two Districts noted a modest decline and one reported modest growth. Overall consumer spending declined further, while higher-end retail spending remained resilient. Some retailers noted a negative impact on consumer purchases from the government shutdown, and auto dealers saw declines in EV sales following the expiration of the federal tax credit. Reports of travel and tourism activity reflected little change in recent weeks, with some contacts noting cautious discretionary spending among consumers. Manufacturing activity increased somewhat, according to most Districts, though tariffs and tariff uncertainty remained a headwind. Revenues in the nonfinancial services sector were mostly flat to down, and reports of loan demand were mixed. Some Districts reported declines in residential construction, while others said it was unchanged, and home sales activity varied. A few Districts noted ongoing recovery in the office real estate market. Conditions in the agriculture and energy sectors were largely stable, though some contacts cited challenges from the low-price environment for oil and for some crops. Community organizations saw increased demand for food assistance, due in part to disruptions in SNAP benefits during the government shutdown. Outlooks were largely unchanged overall. Some contacts noted an increased risk of slower activity in coming months, while some optimism was noted among manufacturers.
Labor Markets
Employment declined slightly over the current period with around half of Districts noting weaker labor demand. Despite an uptick in layoff announcements, more Districts reported contacts limiting headcounts using hiring freezes, replacement-only hiring, and attrition than through layoffs. In addition, several employers adjusted hours worked to accommodate higher or lower than expected business volume instead of adjusting the number of employees. A few firms noted that artificial intelligence replaced entry-level positions or made existing workers productive enough to curb new hiring. Across most Districts, employers had an easier time finding workers, but there were still pockets of difficulty related to certain skilled positions and fewer immigrant workers. Wages generally grew at a modest pace; however, some sectors such as manufacturing, construction, and health care experienced more moderate wage pressure because of a tighter labor supply. Furthermore, rising health insurance premiums continue to put upward pressure on labor costs.
Prices
Prices rose moderately during the reporting period. Input cost pressures were widespread in manufacturing and retail, largely reflecting tariff-induced increases. Some Districts noted rising costs for insurance, utilities, technology, and health care. The extent of passthrough of higher input costs to customers varied, and depended upon demand, competitive pressures, price sensitivity of consumers, and pushback from clients. There were multiple reports of margin compression or firms facing financial strain stemming from tariffs. Prices declined for certain materials, which firms attributed to sluggish demand, deferred tariff implementation, or reduced tariff rates. Looking ahead, contacts largely anticipate upward cost pressures to persist but plans to raise prices in the near term were mixed.
Highlights by Federal Reserve District
Boston
Economic activity expanded slightly, as home sales showed renewed strength. Consumer spending came in flat. Employment edged lower, with no major layoffs, and wages rose modestly. Grocery store prices rose at a moderate pace amid cost pressures on food commodities, although price increases in general were modest. The outlook was cautiously optimistic.
New York
Economic activity declined modestly. On balance, employment fell slightly with some layoffs occurring at major employers in the region. The pace of price increases eased slightly but remained elevated. Manufacturing activity increased moderately. Consumer spending declined slightly, though higher-end retail spending remained resilient. Businesses did not expect much improvement in the months ahead.
Philadelphia
Economic activity was already trending down when the government shutdown spurred further economic disruption—driving modest declines overall across most sectors. Employment levels also fell, and price pressures are stressing low- and middle-income households, while shifting government policies are stressing small businesses.
Cleveland
Fourth District business activity increased slightly in recent weeks, but contacts expected flat activity in the months ahead. Demand for professional and business services increased moderately. Manufacturing activity declined slightly, though some manufacturers reported a boost from AI data centers. Nonlabor cost growth remained robust, while selling prices increased moderately.
Richmond
The regional economy continued to grow modestly in recent weeks. Consumer spending grew modestly despite some hesitation among consumers to make big-ticket purchases. Manufacturing activity contracted modestly while growth in the remaining industries was little changed. Employment levels were also little changed as employers kept headcounts at current levels and wage growth remained moderate. Price growth remained moderate, overall.
Atlanta
Economic activity was little changed, on balance. Employment levels remained flat, and wages and prices grew modestly. Retail sales slowed, and overall travel activity was flat to slightly down. Home sales declined, but commercial real estate improved somewhat. Transportation and manufacturing activity were mostly flat. Demand for energy grew moderately.
Chicago
Economic activity in the Seventh District rose slightly. Employment, consumer spending, business spending, construction and real estate, and manufacturing all increased slightly. Prices rose moderately, wages were up modestly, and financial conditions loosened some. Prospects for 2025 farm income rose slightly.
St. Louis
Economic activity and employment levels have remained unchanged since our previous report, with contacts continuing to report a slowdown in demand amplified by the federal government shutdown. Prices have increased moderately, with contacts expecting price growth to increase over the next six months. The outlook has slightly deteriorated and can be described as pessimistic because of increased risks of higher prices and slower activity.
Minneapolis
Activity was flat on balance. Employers reported a marginal reduction in head counts and modest improvement in labor availability. Price pressures increased. New vehicle sales rose but consumer spending fell overall. Manufacturing, home sales, and commercial construction increased, while most other sectors were flat. Despite strong harvests, agricultural conditions remained weak.
Kansas City
Economic growth in the Tenth District slowed slightly, reflecting softer labor conditions and cooling consumer activity. Wage increases were in line with cost-of-living adjustments, as demand for labor was in balance with supply. Although prices continue to increase modestly, most firms are passing through only 20 percent of increased input costs. Firms remain optimistic about employment growth over the next six months.
Dallas
Economic activity weakened slightly. Declines were seen in nonfinancial services, retail, and banking. Weakness continued in the housing market, and energy activity was flat. The manufacturing sector remained resilient, however, with production growth continuing at a modest pace. Employment fell on net, and prices increased moderately. Outlooks generally worsened, with contacts citing an economic slowdown, tariff concerns, interest rates, and heightened uncertainty.
San Francisco
Economic conditions were mixed over the reporting period. Employment levels largely held steady, wages rose somewhat, and prices were up modestly. Activity in retail trade, agriculture, and residential real estate eased slightly while activity in services, manufacturing, and commercial real estate remained largely unchanged on balance. Lending activity strengthened marginally.