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, March 4, 2026

Summary of Economic Activity

Economic activity was flat on balance, with mixed results across sectors. Consumer spending showed no change overall as increased spending on goods was offset by decreased tourism and hospitality spending. Manufacturing activity rose modestly, nonfinancial services activity edged up, and financial services activity was stable. Bank loan volumes and loan performance held steady. Commercial real estate activity weakened somewhat, and home sales declined moderately. Some small businesses experienced staffing disruptions and weaker sales associated with increased immigration enforcement. Employment declined by a small amount, wages posted slight gains, and prices rose modestly. The outlook improved somewhat on a general decline in uncertainty, even though several contacts continued to cite uncertainty as a significant concern.

Labor Markets

Employment was down slightly overall, even though most contacts reported no changes in head counts or job openings. One manufacturer cut employment in response to the combination of increased input costs and difficulty in passing those costs on to consumers. Wages registered slight gains overall as several contacts said wage pressures had eased recently. Benefits were flat, although some firms anticipated higher health insurance costs and planned to pass a portion through to employees. Staffing firms experienced increased demand as their clients' confidence in the economy strengthened. Several contacts noted an increase in job applicants, including some experienced workers applying for junior-level positions. However, recruiting skilled workers remained difficult, especially for in-person roles in Boston, as job applicants were discouraged by the high cost of living and difficult commutes. Most industries expected steady head counts over the next six months, except staffing and consulting firms, which anticipated increased hiring.

Prices

Prices rose modestly, as cost pressures were mixed. A regional grocer reported declines from a year earlier in the prices of various food commodities, including a large drop in the price of eggs and modest declines in dairy, coffee, and chocolate prices, resulting in lower retail prices on relevant items; but the same contact added that wholesale and retail beef prices rose substantially further. A sporting goods retailer said suppliers passed on tariff-related price increases, having delayed them previously. A flower importer enacted a modest price hike—its third in the preceding 12 months—this time due to weakness in the U.S. dollar. In response, flower retailers reduced the number of stems per bouquet to raise effective prices. Manufacturers' input prices remained elevated due to earlier tariff-related increases but were unchanged recently, while their output prices increased slightly overall—although one firm enacted an above-average year-end price adjustment to maintain profit margins. Financial services prices rose moderately, according to one large firm. Several firms expected ongoing cost pressures from tariffs, but most did not expect to fully pass on cost increases to customers in light of heightened price sensitivity.

Consumer Spending

Consumer spending was flat since the previous report, on balance, with mixed results among contacts. Tourism and hospitality contacts reported modest declines in revenues on average, but retailers had somewhat stronger receipts overall. A grocery store chain experienced a boost in alcohol sales—temporarily bucking a longer-run downward trend—which it attributed to winter storms and the New England Patriots' football playoff games. A flower importer saw stable demand and revenues year-over-year for Valentine's Day but noted decreased demand from wholesalers since Christmas, excluding Valentine's Day. A sporting goods retailer noted stronger-than-expected sales volumes but expressed ongoing concerns about uncertainty and rising costs. Concerning the outlook, retailers grew slightly more optimistic on average, and tourism contacts said that elevated uncertainty continued to dampen the forecast.

Manufacturing and Distribution

Manufacturing activity rose modestly in recent months, with most contacts experiencing healthy demand coupled with ongoing, tariff-related pressures on raw materials prices. One lab equipment firm achieved strong revenue growth on a year-over-year basis despite some of its key customers facing headwinds related to federal policy changes. Capital expenditures and inventories were mostly stable and aligned with projections. One firm planned to expand as its international consumer base shifted production to the United States. The outlook improved on balance, with two machinery-manufacturing firms saying tariff-related uncertainty had stabilized. At the same time, other firms said uncertainty related to tariffs and other federal policies remained elevated, and one faced downside risks to profitability from foreign exchange rate volatility.

Nonfinancial Services

Among First District nonfinancial services firms, business activity, revenues, and profits all edged up from the previous quarter. Increased activity at staffing firms reflected a modest but welcome rebound in hiring for professional services and IT roles. Staffing firms reported no changes in pay rates or bill rates. Most contacts described feeling more optimistic about future demand for their services and said that uncertainty had decreased. For staffing firms, increased optimism stemmed from expected further increases in hiring activity among their clients.

Financial Services

Financial services firms reported stable business activity, and bank loan volume was unchanged. Banks reported modestly higher loan demand and no change in nonperforming loans. Loan pricing declined modestly, with one bank explaining that a downward shift in competing local rates on mortgages and commercial loans had increased loan inquiries and put downward pressure on their own rates for loans in the pipeline. The outlook improved on average and uncertainty diminished, with one banking contact citing greater clarity on tariff policy as a positive development.

Real Estate and Construction

Commercial real estate activity dampened slightly across the First District. Industrial leasing activity slowed a bit, and rents for larger industrial properties softened; smaller industrial spaces, in contrast, registered stable, low vacancy rates and moderate rent increases. Retail leasing activity increased slightly, with rents rising modestly. Office leasing activity remained subdued. Multifamily investment activity pulled back a bit, which one contact attributed to a rent-control ballot initiative in Massachusetts. Lenders sought to increase their real estate portfolios but mostly avoided office properties; increased competition for non-office commercial property loans led to tighter interest rate spreads for those assets. A Worcester area contact said that elevated construction costs had blunted demand for both commercial and residential projects in recent months.

In residential markets, sales of single-family homes and condominiums fell moderately from a year earlier, results attributed to the especially snowy January. Single-family home prices increased moderately, while condominium prices fell slightly, both relative to January 2025. Inventories of single-family homes and condominiums increased moderately in northern New England states and fell sharply in Massachusetts. Properties spent substantially more days on the market than in January 2025. Residential real estate contacts maintained a positive outlook for the spring season, buoyed in part by recent declines in mortgage interest rates.

Community Perspectives
Contacts reported low- and moderate-income communities faced continued pressures from high costs of food, rent, and energy, including home heating. Increased reliance on food pantries, first reported last October, persisted in recent months, with especially acute needs in November with the temporary suspension of federal SNAP funds. Increased immigration enforcement was associated with negative impacts on economic activity, especially for small businesses. In one Maine community experiencing an enforcement surge, many businesses noted disruptions in staffing and/or experienced decreased revenues from lower foot traffic. Several nonprofits reported difficulties satisfying the growing demand for their services, along with facing higher health-care costs, shrinking resources, and unstable federal funding.

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.