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, October 14, 2026

Summary of Economic Activity

Economic activity expanded slightly, with mixed results across sectors. Retail spending softened, and tourism activity was variable, leaving consumer spending as a whole unchanged. Activity in manufacturing and nonfinancial services edged higher. Bank loan volume expanded slightly. Commercial real estate activity was stable, but construction slowed, and home sales saw moderate declines. Employment showed small gains on an uptick in hiring, and wage growth was muted. Prices rose modestly on balance. The outlook dimmed somewhat, with widespread concerns about cost pressures on lower-income families, small businesses, and nonprofits, but there was cautious optimism regarding hiring activity and further growth in manufacturing and nonfinancial services.

Labor Markets

Employment rose slightly on average. Head counts were mostly unchanged in retail, tourism, and financial services, while manufacturing employment edged up overall. Hiring picked up a bit, reflecting both permanent and temporary placements, but some employers were deterred by rising labor costs, particularly medical benefits. Labor demand was healthy for roles in professional services, insurance, law, and accounting, and weaker for health care and IT. Labor supply appeared mostly stable, but contacts pointed to workforce shortages in health care, childcare and human services, owing to increased immigration enforcement and an aging population. A grocer reported staffing challenges in its trucking and supply-chain operations, leading to increased reliance on third-party providers. Wages rose slightly overall, with isolated premiums for highly skilled talent. Staffing contacts said wage increases often fell short of inflation, motivating more workers to seek new jobs. The outlook called for small further increases in hiring going forward.

Prices

Output prices rose modestly on average in recent months, with home heating oil prices up sharply from a year ago. Contacts in manufacturing, tourism, and retail reported slight average price increases, although candy prices rose considerably, reflecting lagged cocoa price impacts. Financial and nonfinancial services firms largely left prices fixed. Restaurant operators were hesitant to raise prices despite broad-based cost pressures, citing consumers' heightened price sensitivity, and instead simplified their menus to trim costs. Produce prices held firm despite elevated diesel prices, but that could change as trucking contracts are renegotiated. Separately, many contacts cited energy and freight expenses as significant ongoing cost burdens, and recent tariffs on Canadian imports created new cost pressures for several manufacturers. Construction costs rose modestly. Looking ahead, tourism contacts expected slight price increases, tuition at a public university was set to rise, and households were expected to face considerably higher utility bills this winter.

Consumer Spending

Consumer spending was unchanged overall but uneven, as retail spending fell slightly, and tourism spending edged higher. In Maine, hotel revenues reached record levels at some higher-end properties, mostly reflecting higher room prices, although the dearth of Canadian tourists continued to weigh on tourism in parts of the region. In Vermont, pre-season ski pass sales and ski resort bookings have outperformed those of last year. Sales at a large grocery chain were mixed, as summer's cyclospora outbreak prompted significant declines in produce sales, especially berries and salads; but strength in other categories helped offset the produce-related weakness, which recently stabilized somewhat. A range of contacts in retail and hospitality noted profit margins getting squeezed by a combination of rising costs and consumers' price-consciousness. Contacts in northern Maine expressed increased pessimism regarding discretionary consumer spending heading into winter, given the large increase in home heating costs over last year. Contacts throughout the First District also noted downward pressure on disposable incomes from inflation more generally. Nonetheless, contacts expected ongoing strength in higher-end consumer spending.

Manufacturing and Distribution

Manufacturing activity expanded slightly on a combination of robust growth for a small number of firms and stable activity otherwise. Capital expenditures and inventories were mostly unchanged, although some contacts reported substantial increases in both measures. Profits increased by a small margin for most contacts. Frozen food manufacturers experienced stable demand net of seasonal increases. An advanced cutting products manufacturer noted significant revenue growth derived from investments in data centers, energy, and defense, while a machine parts manufacturer reported robust demand and record revenue levels. Higher energy costs hindered expansion plans and hiring activity for one energy-intensive firm. Overall, firms offered generally positive outlooks, though tempered by uncertainty concerning trade policy and inflation in input prices.

Nonfinancial Services

Demand for nonfinancial services increased broadly across contacts in staffing, higher education, and professional services. Revenues rose slightly on average, although individual reports ranged from flat revenues to moderate increases. Contacts in IT and law reported modest growth in capital expenditures and a moderate rise in profits on average. Staffing contacts noted that employers struggled to find candidates for specialized jobs in law, accounting, and insurance, as those roles are dominated by people nearing or entering retirement. Contacts expected modest to moderate growth in demand for their services going forward and felt that uncertainty had decreased compared with two months ago.

Financial Services

Bank loan volume was mixed but rose a bit overall. Changes in loan demand ranged from slight decreases to moderate increases, and multiple contacts said higher borrowing rates dampened demand. Credit standards were unchanged, and loan pricing firmed slightly; Most contacts reported no changes in the share of nonperforming loans. A large financial services firm reported slight growth in both revenues and profits, along with stable capital outlays. Banks expressed decreased optimism and greater uncertainty—tied to the conflict in the Middle East, interest rates, and upcoming elections—while other financial services firms maintained stable to optimistic outlooks.

Real Estate and Construction

Commercial real estate activity was roughly stable on balance, with contacts reporting both positive and negative developments. Office leasing continued to rise slowly, while vacancy rates edged lower. Industrial leasing activity, rents, and vacancy rates were flat on average. Construction slowed somewhat, with weakness attributed to earlier overbuilding—in the case of Boston—and prohibitive costs in the case of Providence. Nonetheless, Rhode Island continued to see substantial public infrastructure construction. Loan availability was stable, but financing costs increased, and loan terms tightened. Commercial property foreclosures remained limited despite elevated rates of loan distress among urban office buildings. The outlook for commercial real estate was mostly unchanged, but contacts cited downside risks tied to political uncertainty and rising longer-term interest rates.

Closed residential home sales decreased moderately in August on a year-over-year basis on average, although Massachusetts' sales registered only a small decline, and sales fell sharply in Maine. As exceptions to the overall trend, single-family sales rose modestly in New Hampshire, and condominium sales improved in Vermont. Median home prices increased modestly year-over-year, and home inventories expanded somewhat on average. Apartment leasing was flat, with multifamily construction and sales both down slightly.

Community Perspectives

Contacts serving low- and moderate-income communities report intensifying strain, instability, and uncertainty attributed to rising cost burdens for households, businesses, and nonprofit organizations. Specifically, contacts mentioned difficulties managing higher utilities and energy prices, followed by groceries, housing costs, transportation, childcare, and insurance. Low-income households faced risks of losing Medicaid, SNAP, and other benefits in 2027, given new work requirements and more frequent paperwork. Immigration enforcement also reportedly disrupted families' spending and saving patterns and dampened small business revenues and hiring activity. Small businesses and nonprofits faced mounting financial strain due to inflation and revenue uncertainty.

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.