September 5, 2025—The August edition of the Federal Reserve’s Beige Book, published on September 3, 2025, reports little to no change in economic activity across most districts. Some pundits fear, however, that the country is at risk of economic stagnation as consumers cut back on spending and other economic sectors respond somewhat erratically under the strain of tariffs.
On a macroeconomic level, only a few Federal Reserve districts reported modest growth. Consumer spending softened as rising living costs continued to outpace wage gains, with tariffs and economic uncertainty weighing further on demand. Retailers and hospitality providers relied on promotions to sustain domestic leisure demand, while manufacturers shifted to local sourcing and automation to contain costs. Data center construction, tied to the investment in AI, emerged as both an area of growth and a new source of energy drain.
Labor markets were stable in most Districts. Firms showed caution in hiring, citing weaker demand, while some reduced headcount through attrition or automation. Wages grew modestly to moderately but showed signs of easing in some regions.
Prices rose at a modest to moderate pace in most Districts, though input costs—driven by tariffs, insurance, utilities, and technology—often outstripped selling prices. Competitive pressures limited pricing power, yet businesses broadly expect cost pressures, and possibly the pace of price growth, to persist.
Locally, the economic outlook in the Boston district remained guardedly positive. While economic activity edged up overall, consumer spending was flat. Employment dipped slightly, while wages and prices rose modestly. Home sales were moderately higher than a year ago.
With the Beige Book released just ahead of the September 16-17, 2025 FOMC meeting, the economic observations feed directly into the FOMC’s decision-making process, highlighting areas of economic resilience alongside vulnerabilities. August hiring stalled, with the U.S. economy adding just 22,000 new jobs—a sign of a weakening labor market that will weigh on the FOMC. As the committee meets, the debate is likely how much to cut rates, not whether to cut. For credit unions, this means staying alert to potential shifts in monetary policy that could affect loan demand, credit risk, and interest margins, while continuing to monitor economic conditions that impact their members’ financial stability and borrowing capacity.