U.S. Federal Reserve Beige Book (November 2025)

Beige Book Points to Softer Consumer Spending and Labor Market Conditions During the Government Shutdown 

• Today's Beige Book sheds some light on how the U.S. economy fared during the government shutdown and the early days of reopening, with information collected on or before November 17. Overall, economic activity was little changed since the previous report. Looking across the twelve Fed Districts, two Districts noted a modest decline (down from four in October) and one reported modest growth (down from three in October), while the remaining nine saw no change (up from five in October). 
• Consumer spending appears to have softened further. Auto dealers saw a drop in EV sales following the expiration of the federal tax credit, other retailers noted the negative impact stemming from the government shutdown. Community organizations saw increased demand for food assistances due to the disruption to SNAP benefits. 
• Labor demand weakened, with around half of Districts noting weaker labor demand, and employment was said to have declined slightly. This is a downgrade from the last Beige Book which described employment as stable. Most contacts appear to be limiting headcount via hiring freezes and attrition rather than layoffs. AI appears to also be impacting job growth via reduced entry-level hiring or increased productivity of existing workers. AI was mentioned 13 times in this report, up from 9 previously. Labor availability continued to improve, with employers having easier time finding workers, aside from certain highly skilled positions or those typically filled by immigrant workers. Wages grow was described as "modest" pace, but increasing health insurance premiums continued to push labor costs higher.
• On the inflation front there appears to be little change relative to October but cost pressures appear to be intensifying. Prices were said to continue to rise moderately, although tariff-related input cost pressures were said to be "widespread in manufacturing and retail" and there were "multiple reports of margin compression" and financial strain due to tariffs. Input costs were also rising due to higher cost of services such as "insurance, utilities, technology, and health care". Firms anticipated continued cost pressures, but plans to raise prices in the near term were mixed. 

Key Implications

• Given the data delays, increased divisions withing the FOMC, and rapidly changing market expectations for a rate cut in December, today's Beige Book release takes on added importance for additional insights into how the economy has fared during the government shutdown. Most noteworthy in today's report was that consumer spending "declined further" and that employment declined slightly. Ongoing pressure on input costs and profit margins stemming from tariffs as well as from other channels was similar to the previous report. The government shutdown also had a negative effect on economic activity. 
• Market-based probabilities for a December cut have been moving wildly recently, swinging from a low of 30% earlier last week to about 80% today. FOMC speakers have also been divided in recent weeks. Evidence from today's Beige Book aligns with the markets as well as the dovish-leaning members of the FOMC who favor another rate cut in December. If the Fed follows through with the December cut, we anticipate it will take a pause for some time.

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