The Beige Book

The Beige Book is published eight times per year. Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by District and sector.

Boston (First District) Beige Book Report, November 26, 2025

Summary of Economic Activity

Economic activity continued to expand at a sluggish pace, as strong gains in home sales were largely offset by flat consumer spending. Manufacturers reported modest growth in sales and a reduction in tariff-related uncertainty. Firms in the nonfinancial services sector experienced slight revenue growth, and commercial real estate activity picked up slightly amid a slow recovery in the office market. Labor demand weakened further, resulting in a small decline in employment. Wages and prices alike rose at a modest pace, but some businesses experienced significant cost pressures. The outlook remained cautiously optimistic for continued growth, with ongoing downside concerns about the labor market.

Labor Markets

Employment edged lower amid weakening labor demand, and wages rose modestly. Hiring activity was mixed, and no large layoffs were reported. A grocery store chain experienced stable employment and said that it was recruiting new workers only to offset attrition. A clothing retailer reported increased ease of hiring and added more seasonal workers this year over last. Manufacturing employment came in slightly lower, with one firm citing elevated uncertainty as a restraint on hiring. Employment was unchanged among nonfinancial services firms, with stable hiring for legal and professional services roles. However, contacts in the staffing services industry reported weaker overall labor demand, especially for temporary roles, and a contact at a Massachusetts business association said that AI was holding back entry-level hiring. About half of firms reported no hiring difficulties or even easier hiring conditions in recent months, while others noted that finding qualified applicants was challenging. Wage increases were modest overall, although starting wages were flat. Most firms anticipated that their head counts would remain stable over the next 12 months, but some planned to add employees, while others planned to reduce employment through attrition and moderate layoffs.

Prices

Prices rose further at a modest pace on average, though somewhat less rapidly than in the last report. A grocery store chain posted mostly moderate price increases but marked up the prices of beef, coffee, and cocoa products by considerable margins in response to supply-side cost pressures, including but not limited to tariffs; they also noted a large drop in the price of eggs. Restaurants' menu prices were flat, although contacts expected the rising beef prices to exert pricing pressure going forward. A clothing retailer kept prices steady recently but experienced a pronounced pullback in sales of certain items in response to earlier markups. Manufacturers' output prices rose slightly, as most reported only mild cost pressures; however, one manufacturer, facing strong cost pressures linked to tariffs, planned to raise its prices soon. Nonfinancial services firms held their billing rates fixed despite facing rising insurance costs. Many contacts expected to face ongoing cost pressures going forward, but most had no definite plans to raise their prices in the near term.

Retail and Tourism

First District retail goods sales (not including autos) declined modestly in recent months, and tourism activity softened a bit, but spending at restaurants rebounded, leaving overall consumer spending roughly unchanged. A Massachusetts restaurant industry contact reported a moderate increase in third-quarter sales compared with the same quarter in 2024, driven by an increase in private events. A discount retailer experienced moderate declines in same-store sales compared with a year earlier, similar to its August report, although a pick-up in cross-border commerce with Canada lifted sales at certain locations. A clothing retailer said sales for August through October were down moderately from a year earlier, citing higher prices and above-normal fall temperatures as factors. An online home furnishings retailer noted flat overall sales and flat revenues per order despite recent price increases, suggesting consumers were turning to lower-priced items. Airline passenger volumes through Boston were down modestly from 2024 levels in recent months, although cruise passenger volumes were stable. Contacts expressed cautious optimism about their near-term growth prospects while acknowledging headwinds from tariff-related uncertainty, disruptions related to the government shutdown, and consumers' heightened price sensitivity.

Manufacturing and Related Services

Manufacturing sales rose modestly from the previous quarter, meeting or exceeding expectations, and some contacts reported very strong revenue growth from the previous year. A consumer goods manufacturer attributed strong recent sales to promotional activity and healthy spending by affluent customers. Another manufacturer noted increased demand related to AI infrastructure investments. Capital expenditures were unchanged. According to contacts, tariff-related uncertainty abated somewhat but not altogether. The outlook improved a bit, as all firms expected at least modest revenue growth in the near term.

Nonfinancial Services

Revenues and demand increased slightly on average among contacts in nonfinancial services. A law firm noted that revenue growth was boosted by stronger-than-expected merger and acquisitions activity. Reports from staffing services firms were mixed, as one contact benefited from consolidation in the regional health-care staffing industry and others did less business owing to a general slowdown in labor demand. A higher education contact in Massachusetts said that demand was down for professional masters' programs, including MBA and data science, owing to uncertainty about the impact of AI on career opportunities. The outlook improved slightly and was cautiously optimistic overall. Contacts noted decreased uncertainty related to trade policy, although some said lack of official economic data clouded the outlook, and others expressed concerns about rising financial strains on low- and middle-income consumers.

Commercial Real Estate

Commercial real estate activity increased slightly in recent weeks on improved demand for office properties. Commercial property transactions were up considerably from one year earlier owing to increased investor confidence and easier financing conditions but were little changed recently. A Hartford contact said that return-to-office policies had pushed the office vacancy rate lower in that area recently, but elsewhere in the First District, office vacancies were unchanged. Industrial leasing activity was steady at a healthy pace. Apartment rent growth continued to moderate, driven by weak demand at the low end of the market. In the retail market, low vacancies and solid rent growth persisted despite some softness in consumer spending. High construction costs—driven by labor shortages and tariffs—continued to deter development. One contact said that the data center construction boom would bypass New England because of the area's lack of power-generating capacity. The outlook was mildly positive on average. Contacts expected additional progress in the office market, although some raised concerns related to a potential slowdown in the labor market.

Residential Real Estate

Residential real estate sales in the First District increased by above-average margins in September 2025 from the previous September, an improvement from August's results that was attributed to lower mortgage rates and rising inventories. Stronger sales were seen for single-family homes as well as condos; an exception was single-family sales in Rhode Island, which fell sharply from a year earlier. Inventory for single-family homes and condos continued to expand rapidly. Single-family home prices increased at a moderate pace from a year earlier, while condo prices were roughly unchanged for the same period. Properties spent more days on the market, especially homes at higher price points, as buyers reportedly held out for lower prices. Indeed, some areas, including greater Boston, experienced moderate declines in home prices over the past three months. One contact was optimistic that lower interest rates would continue to push more prospective buyers into the market.

For more information about District economic conditions visit: www.bostonfed.org/regional-economy.

All Beige Book content going back to 1996 can be found at the Board of Governors website.

The Minneapolis Fed hosts the Beige Book archives by district, going back to 1970.