--- source: Federal Reserve System url: https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20260304.pdf document_type: pdf date_retrieved: 2026-03-09 period: February 2026 parent_publication: Beige Book - Summary of Commentary on Current Economic Conditions by Federal Reserve District indicators_covered: [Overall Economic Activity, Labor Markets, Prices, Employment, Wage Growth, Consumer Spending, Manufacturing, Residential Real Estate, Commercial Real Estate, Financial Services, Interest Rates] --- # The Beige Book ## Summary of Commentary on Current Economic Conditions by Federal Reserve District **February 2026** --- ## About This Publication ### What is the Beige Book? The Beige Book is a Federal Reserve System publication about current economic conditions across the 12 Federal Reserve Districts. It characterizes regional economic conditions and prospects based on a variety of mostly qualitative information, gathered directly from each District's sources. Reports are published eight times per year. ### What is the purpose of the Beige Book? The Beige Book is intended to characterize the change in economic conditions since the last report. Outreach for the Beige Book is one of many ways the Federal Reserve System engages with businesses and other organizations about economic developments in their communities. Because this information is collected from a wide range of contacts through a variety of formal and informal methods, the Beige Book can complement other forms of regional information gathering. The Beige Book is not a commentary on the views of Federal Reserve officials. --- # National Summary ## Overall Economic Activity Overall economic activity increased at a **slight to moderate pace** in seven of the twelve Federal Reserve Districts, while the number of Districts reporting flat or declining activity increased from four in the prior period to five in the current period. Although consumer spending increased slightly on balance, two Districts reported ongoing declines, and many noted that sales were dampened by economic uncertainty, increased price sensitivity, and lower-income consumers pulling back on spending. Districts impacted by winter storms said that retail traffic generally slowed, and one District said immigration enforcement activity negatively affected customer demand in urban areas. Auto sales were mostly down for Districts that reported on them, with many citing continuing affordability issues. Manufacturing activity improved overall since the previous reporting period, with **eight Districts reporting varying degrees of growth** and two reporting declines. Manufacturing contacts in many Districts reported increases in new orders, and **several cited boosts in demand from data centers and, relatedly, energy infrastructure**. Transportation activity was mixed across Districts that reported on it, with three reporting contractions and two reporting modest growth. Overall, financial services activity was reported as **stable to up**, with commercial lending being the primary area of strength. For most Districts that reported on residential real estate and construction, sales and activity decreased slightly, with low inventories and affordability remaining key issues. Nonresidential construction activity was mixed across reporting Districts but increased slightly on net. Among reporting Districts, agricultural conditions were mostly flat, and energy activity grew modestly on balance. Overall, **economic expectations were optimistic**, with most Districts expecting slight to moderate growth in the coming months. ## Labor Markets Employment levels were generally stable in recent weeks as **seven of the twelve Districts reported no change in hiring**. Contacts in several Districts cited rising nonlabor input costs, softer demand, or uncertainty about overall economic conditions as reasons for flat or lower employment levels. Firms in some Districts and in various sectors looked to **AI or other forms of automation** to gain efficiencies, with most emphasizing the goal of productivity enhancement rather than worker replacement. Wages rose at a modest or moderate pace in most Districts as firms competed for talent in select areas, including the skilled trades. Several Districts continued to report upward pressure on total compensation due to rising health insurance premiums. ## Prices Prices increased **moderately** in recent weeks, with **eight Districts reporting moderate price growth** and four seeing slight or modest increases. Many Districts reported that costs rose across several nonlabor inputs, including insurance, utilities and energy, and metals and other raw materials. **Nine Districts mentioned that tariffs contributed to increased costs.** Some firms continued to pass tariff-related cost increases through to their customers, and others began to do so after having absorbed previous increases. Still, most Districts received reports of some firms holding selling prices stable despite higher costs because their customers were increasingly price sensitive. On balance, firms expected prices to rise at a somewhat slower pace in the near term. --- ## Highlights by Federal Reserve District ### Boston Economic activity was **flat on balance**, as was consumer spending. Employment edged down, and wage growth was slight. Prices rose modestly, as several contacts reported ongoing cost pressures from tariffs, while certain food prices were marked down from previously elevated levels. The outlook improved, but financial pressures on low-income families remained intense. ### New York Economic activity **declined modestly** despite a small pickup in manufacturing. Employment remained flat, and wage growth was steady and modest. Selling price increases remained moderate. Consumer spending grew slightly, though uncertainty prompted some consumers to pause major purchases and pull back on spending. Businesses expected conditions to improve somewhat. ### Philadelphia Economic activity in the Third District **grew modestly**, up from a slight pace last period. Sales activity grew, despite many contacts noting that activity was hampered by adverse weather. Employment levels again rose modestly. Firms reported own-price inflation ticked down in the first quarter, while wage inflation remained modest. Contacts continued to report that low-, middle-, and fixed-income households were struggling to pay for necessities. ### Cleveland Fourth District business activity **increased modestly** in recent weeks, with continued modest growth expected in the months ahead. Manufacturing and commercial construction contacts reported increased demand, with several highlighting **data center development as a primary driver of activity**. Nonlabor cost pressures remained robust, while selling prices continued to increase moderately. ### Richmond The regional economy continued to **grow modestly** in recent weeks. Consumer spending on retail was flat while spending on travel and tourism increased slightly. Manufacturing and residential real estate activity declined while commercial real estate activity increased moderately. Employment increased slightly. Prices continued to grow at a moderate year-over-year rate. ### Atlanta Economic activity **expanded at a modest to moderate pace**. Employment was flat to down somewhat; wages grew modestly. Prices were flat to slightly up. Consumer spending and tourism increased. Housing demand improved, but commercial real estate slowed. Transportation demand was flat to slightly down, while manufacturing was up slightly. Energy activity grew moderately. ### Chicago Economic activity **increased slightly**. Manufacturing demand rose modestly; consumer spending and construction and real estate activity rose slightly; employment and business spending were flat; and nonbusiness contacts saw no change in activity. Prices and wages rose moderately, and financial conditions loosened. Farm income in 2026 was expected to be similar to 2025. ### St. Louis Economic activity has **remained unchanged** since our previous report but is expected to increase over the next few months. Employment levels were unchanged. Wages and prices continued to increase moderately. The outlook among contacts has improved to be cautiously optimistic. ### Minneapolis District economic activity **fell slightly**. Employment softened while labor demand was little changed. Wage growth was moderate, and prices ticked up modestly. Consumer spending fell. Manufacturing decreased moderately. Construction activity was moderately lower with larger declines in nonresidential building. Agricultural conditions remained largely unchanged at weak levels. ### Kansas City Economic activity in the Tenth District **increased slightly** over the reporting period. Labor conditions remained steady, with firms utilizing technology and workflow improvements to ease operational constraints. Prices have increased slightly. Energy activity increased modestly as higher oil and natural gas prices supported additional drilling activity. ### Dallas Economic activity in the Eleventh District **expanded moderately** over the reporting period, vigorously in manufacturing and modestly in services. Bank lending, retail sales, and commercial real estate transactions grew. Energy sector activity declined and agricultural conditions worsened. Employment grew slightly, while wages and prices increased modestly to robustly. Outlooks remained steady despite elevated uncertainty. ### San Francisco Economic activity **contracted slightly** over the reporting period. Employment was stable on net, but layoffs were reported in technology services. Prices rose moderately, while wages grew slightly. Activity in retail and services weakened slightly, and contacts described a **bifurcated economy**. Conditions were stable in manufacturing and agriculture but mixed in real estate. --- # Federal Reserve Bank of Boston ## 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. 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. ## Key Points - Boston District - Manufacturing rose modestly with healthy demand and tariff-related raw material pressures - Consumer spending flat overall; retailers somewhat stronger, tourism/hospitality down - Employment down slightly; wage growth was slight; recruiting skilled workers remained difficult - Prices rose modestly with tariff pressures and some input price stabilization - Loan pricing declined as local competition increased - Residential real estate sales fell moderately from year earlier - Low- and moderate-income households faced continued pressures from high food, rent, and energy costs - Immigration enforcement associated with staffing disruptions and lower foot traffic for small businesses --- # Federal Reserve Bank of New York ## Summary of Economic Activity Economic activity in the Second District continued to **decline modestly** in early 2026 despite a small pickup in the manufacturing sector. On balance, employment remained flat, and wage growth was modest and steady. The pace of selling price increases remained moderate. Consumer spending grew slightly, though uncertainty prompted some consumers to pause major purchases and pull back on spending. Housing market activity was unchanged, constrained by limited inventory, which moved even lower across much of the District. Activity in the broad finance sector contracted slightly. Businesses expected conditions to improve somewhat in the coming months. ## Key Points - New York District - Economic activity declined modestly despite manufacturing pickup - Employment flat on balance; retail and construction reported sharp head count declines - Wages steady and modest; strong demand for finance and specialized tech skills - Selling price increases remained moderate; tariffs a major driver of input costs - Food manufacturers reducing product quantities per package while keeping prices constant - Consumer spending grew slightly; high-income consumers price-conscious; lower-income households pulled back - Auto sales declined both new and used, with affordability and uncertainty cited - Manufacturing fairly optimistic; wholesale and distribution activity declined - Housing market flat and very tight; office leasing subdued - Finance sector contracted slightly with some softening in deposit competition --- # Federal Reserve Bank of Philadelphia ## Summary of Economic Activity Business activity in the Third District **grew modestly** this period, up from a slight pace of growth in the prior period. Sales activity continued to grow even as many contacts noted that activity was hampered by adverse weather—significant snowfall and persistent subfreezing temperatures. Employment levels increased modestly. Wage inflation was unchanged at a modest pace. Price pressures remained elevated, and affordability concerns persisted for low-, middle-, and fixed-income households. Firms' own-price inflation ticked down but remained at a moderate pace. ## Key Points - Philadelphia District - Business activity grew modestly; adverse weather hampered activity but did not prevent growth - Employment increased modestly overall despite February manufacturing declines - Wage inflation unchanged at modest pace; cost-of-living adjustments in 2-3% range - Firms' price increases ticked down to 2.8% from 3.0%, but still double year-ago level - Almost 40% of firms reported customers became more price sensitive; many not planning price increases - Manufacturing activity rose modestly with increased new orders - Nonmanufacturing activity rose slightly; retailers up despite adverse weather; tourism rebounded - Existing home sales declined modestly; affordability issues persist - Low-, middle-, and fixed-income households struggling with necessities; nonprofits report increased demand --- # Key National Findings ## Data Center & Energy Infrastructure Demand The February 2026 Beige Book highlights **data center development as a primary economic driver** across multiple Districts: - **Cleveland**: Multiple contacts noted majority of manufacturing/construction activity came from data center buildouts - **Dallas**: Manufacturing rebounded vigorously with continued demand driven partly by data center needs - **Atlanta**: Pockets of hiring strength in firms involved in data center construction; utilities reporting rising electricity demand from data centers - **Chicago**: Data center projects moving forward; demand for steel, chemicals, and machinery strengthened partly from data centers This represents a significant structural shift in regional economic activity, offsetting weakness in traditional sectors. ## Tariff Impact Nine of twelve Federal Reserve Districts specifically cited **tariffs as a primary source of cost pressures**: - Food manufacturers reducing package quantities while holding prices constant - Steel manufacturers reporting rising costs and selling prices - Freight costs surged with spot market rates described as "exploding" - Manufacturing contacts reported 3-4.25% price increases to offset tariff impacts - Some firms split tariff costs with customers in 2025, planned full pass-through in 2026 - Input costs rising without notice, occasionally doubling, complicating order placement - Waning uncertainty helped with budget planning but tariff concerns persisted ## Bifurcated Economy Multiple Districts described a **K-shaped or bifurcated economy**: - **San Francisco**: High-income households maintained robust discretionary spending; low- and middle-income households traded down to lower-cost, store-label alternatives - **Dallas**: Lower-income households cutting discretionary spending, trading down to less-expensive goods - **Chicago**: Jewelry and apparel purchases up; computers, electronics, furniture lagged overall growth - Discount stores steady to improving; higher-end retail remained resilient ## Labor Market Dynamics Despite stable employment headline, several structural changes evident: - **Seven of twelve Districts**: No change in hiring; employment flat - **AI/Automation adoption**: Emphasized productivity enhancement rather than worker replacement - **Labor supply constraints**: Quarter of Tenth District contacts identified labor supply as top concern - **Immigration enforcement**: Minneapolis and other districts noted significant negative impacts on staffing and consumer demand - **Wage pressures**: Modest to moderate in most Districts; concentrated in healthcare, skilled trades, specialized tech ## Consumer Spending Pullback Low- and moderate-income consumer spending deteriorated across Districts: - Economic uncertainty prompted major purchase deferrals - Price sensitivity increased sharply (Philadelphia: 40% of firms reported customer sensitivity up) - Housing affordability remained key constraint - Nonprofits reported elevated demand for food, rental, and utility assistance - Employed workers reported income pressure and household budget stress --- **Report Date:** March 4, 2026 **Data Collected:** Through February 23, 2026 **Reporting Period:** January through February 2026 **Federal Reserve System Disclaimer:** This document summarizes comments received from contacts outside the Federal Reserve System and is not a commentary on the views of Federal Reserve officials. --- **Source:** https://www.federalreserve.gov/monetarypolicy/files/BeigeBook_20260304.pdf