Fed Beige Book Shows Spending Slide, Jobs Cooling
Fed Beige Book found activity little changed while consumer spending weakened and hiring cooled, increasing uncertainty for the December FOMC and markets.
KEY TAKEAWAYS
- Beige Book noted activity little changed while consumer spending slipped outside affluent households.
- Employment edged lower across many districts, signaling further labor-market cooling.
- The report raised uncertainty for the December FOMC deliberations without offering new policy guidance.
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The Federal Reserve's Beige Book, released on Nov. 26, 2025, reported that U.S. economic activity was little changed while consumer spending declined outside affluent households and the labor market showed signs of cooling, complicating the outlook ahead of the December Federal Open Market Committee meeting.
Economic Activity Stable Amid Spending Decline
The Beige Book found overall U.S. economic activity was little changed in recent weeks across the 12 Federal Reserve districts, with the Southeast district also reporting stable conditions. However, consumer spending weakened outside higher-end shoppers. Purchasing plans for big-ticket items such as appliances, electronics, vehicles, and homes declined in November after remaining steady since May.
The report noted a broad pullback in planned spending on services over the next six months, with nearly every category showing declines except visits to historic sites, museums, and libraries, which inched up, and childcare and educational services, which remained steady. Healthcare spending rose to become the second-largest planned services category, overtaking streaming and internet/mobile subscriptions. This shift was partly linked to renewed attention on insurance premiums and subsidies during a government shutdown.
Restaurants, healthcare, beauty and personal care, hotels for personal travel, and streaming services ranked among the top five planned services categories. The report described spending trends as increasingly focused on lower-cost leisure and essential services rather than expensive discretionary activities.
Labor Market Cooling and Income Disparities
Employment edged lower across many districts, marking a shift from earlier reports and signaling further labor-market cooling in the third quarter of 2025. Inflation was described as moderate in November.
Real disposable income growth held at 2.0% year-over-year in July and August. However, income growth slowed to 1.4% year-over-year for lower-income households in the third quarter, while higher-income households maintained 4.0% growth. The Beige Book highlighted the concentration of spending among affluent consumers: the top 20% accounted for 57.0% of overall U.S. consumption on average from 2020 through the second quarter of 2025. The Dallas Federal Reserve warned that this K-shaped growth—strong activity among high earners and restrained spending among most others—may increase economic fragility.
The report noted that tariff-driven price pressures had not yet significantly reduced consumer spending but were expected to weigh on purchasing power in coming quarters. It contained no new monetary policy guidance, serving instead as an anecdotal snapshot for policymakers ahead of the December FOMC meeting.
"The concerns are that the emergence of K-shaped growth—bifurcated activity at an elevated rate among high earners and much more restrained among most others—may put the U.S. in greater economic peril," the Dallas Fed said.
