The Federal Reserve said that in recent weeks, economic activity in most parts of the United States has grown at a mild to moderate pace, but an increasing number of regions have reported that economic activity has been flat or declined.
The Federal Reserve’s Beige Book survey released on Wednesday found that in many regions, “economic uncertainty, increased price sensitivity and reduced spending by low-income consumers have all dampened sales.”
The report indicates that although enterprises are all seeking to utilize artificial intelligence to enhance efficiency, the overall employment level remains stable.
“Companies in some regions and across various industries are seeking artificial intelligence or other forms of automation to boost efficiency, with most emphasizing the goal of enhancing productivity rather than replacing workers,” the Beige Book noted.
Eight of the Federal Reserve’s 12 districts reported moderate inflation. Despite this, overall, businesses expect the pace of price increases to “slow slightly” in the short term. Businesses indicated that wage growth was moderate or moderate in most regions, and some regions also reported that total compensation was under upward pressure due to rising health insurance costs.
After cutting rates three times in 2025, Fed officials held rates steady in January, citing inflation above target and a recent stabilization in the labor market. According to the minutes of the January meeting, some policymakers even considered that if inflation remained high, the Fed might need to raise rates. Some officials said they expected rates to remain unchanged for some time.
Boston: Strengthening immigration enforcement has had a negative impact on economic activities, especially for small businesses. In a community in Maine where enforcement has been stepped up, many businesses have reported being affected in terms of staffing and/or experiencing a decline in revenue due to a reduction in customer traffic.
New York: Despite a sluggish overall hiring climate, some large companies with stable operations are still actively recruiting recent college graduates, citing long-term employment needs and the belief that artificial intelligence will enhance productivity and business activities.
Philadelphia: Nearly 40% of companies said that their customers have become more price-sensitive since the last quarter – a proportion lower than 59% in November; 56% of companies said there was little change. Some respondents said they have no plans to raise prices as a result.
Atlanta: Most companies expect to maintain their employee levels throughout 2026. Some companies have indicated plans to implement artificial intelligence to enhance productivity rather than replace employees, at least in the medium term.
Cleveland: Multiple contacts indicated that they are leveraging automation and artificial intelligence solutions to enhance back-office efficiency, and one banker predicted that this trend could further reduce personnel requirements.
Richmond: Although still weak compared to last year, consumer spending on tourism has slightly improved compared to the previous cycle. Notably, the growth in hotel revenue in Virginia was mainly driven by high-end hotels, while the revenue of mid-range and low-end hotels remained largely unchanged.
Chicago: The volume of commercial loans has slightly increased, with reports indicating a rise in demand from large enterprises, including those investing in artificial intelligence, and the defense sector.
St. Louis: A mid-sized manufacturer in Memphis said that due to ongoing recruitment difficulties, robots and industrial artificial intelligence have become the most reliable way to maintain output and quality, and its capital budget is thus shifting towards automation.
Minneapolis: Companies pointed out that other challenges have weakened the urgent need for labor or the ability to find skilled workers. A manufacturer in North Dakota reported poor sales and said, “We will deal with the current surplus of labor through natural attrition.”
Kansas City: According to informants, about half of the rural hospitals are operating at a loss, and many struggling hospitals may face closure. In northern Missouri, it is reported that five hospitals are at risk of closure, which could result in 1,000 people losing their jobs.
Dallas: Despite the growing activity in the healthcare industry, healthcare companies say that spending and investment decisions will be put on hold until there is more clarity on extending the enhanced subsidies under the Affordable Care Act (ACA).
San Francisco: A contact in the financial services industry pointed out that many job seekers are overqualified but still looking for work, and the company recently hired a candidate with decades of experience for an entry-level position.
