EconomyxAI · Beige Book Sector Monitor February 2025Released March 5, 2025 · Data through February 24 |
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Conditions index +0.01 avg of 11 sectors, −2 to +2 |
| Outlook index +0.30 sectors with an outlook |
| Districts growing 4/12 per National Summary |
| Positive momentum 5/11 sectors improving |
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This release in brief The read | ■ | Activity rose only slightly, with six districts flat, four growing and two contracting. | | ■ | Consumers pulled back: spending fell in seven districts, most sharply in Kansas City, as price-sensitive shoppers cut discretionary purchases while essentials held up. | | ■ | Manufacturing improved slightly in most districts, but construction declined and housing was mixed as mortgage rates ticked up. | | ■ | Price pressure picked up: input costs outran selling prices in manufacturing and construction, and nearly all firms expect tariffs to raise costs. | | ■ | Outlooks stayed slightly optimistic but uncertainty rose sharply; New York and San Francisco turned less optimistic and many firms paused hiring and capex. |
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Sector prospects Where the 3–12 month view points Strongest prospects Energy
XLE
▲ Improving | +0.36 |
| Financials
XLF
▶ Steady | +0.32 |
| Industrials
XLI
▲ Improving | +0.17 |
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| Weakest prospects Consumer Discretionary
XLY
▼ Weakening | −0.55 |
| Real Estate
XLRE
▼ Weakening | −0.27 |
| Information Technology
XLK
▼ Weakening | −0.24 |
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All 11 GICS sectors, ranked Sector scoreboard | # | Sector | −1 0 +1 | Score | Signal | Now | Outlook | Mom. |
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| 1 | Energy
XLE | | +0.36 | Leaning Favorable | +0.51 | +0.26 | ▲ +0.55 | | 2 | Financials
XLF | | +0.32 | Leaning Favorable | −0.01 | +1.00 | ▶ −0.14 | | 3 | Industrials
XLI | | +0.17 | Leaning Favorable | +0.09 | +0.45 | ▲ +0.46 | | 4 | Materials
XLB | | +0.11 | Neutral | +0.04 | n/a | ▶ +0.14 | | 5 | Consumer Staples
XLP | | +0.08 | Neutral | +0.28 | n/a | ▶ +0.23 | | 6 | Utilities
XLU | | +0.04 | Neutral | +0.13 | n/a | ▶ +0.00 | | 7 | Communication Services
XLC | | +0.02 | Neutral | +0.00 | n/a | ▶ +0.07 | | 8 | Health Care
XLV | | −0.14 | Neutral | +0.00 | −1.00 | ▼ −0.36 | | 9 | Information Technology
XLK | | −0.24 | Leaning Unfavorable | −0.06 | +1.00 | ▼ −0.57 | | 10 | Real Estate
XLRE | | −0.27 | Leaning Unfavorable | −0.30 | +0.15 | ▼ −0.68 | | 11 | Consumer Discretionary
XLY | | −0.55 | Unfavorable | −0.54 | +0.24 | ▼ −1.94 |
Prospect Score blends current conditions, district outlooks, momentum, a sector-specific macro tilt and margins. Now = weighted current conditions; Outlook = n/a when too few districts gave one; Mom. = change vs the average of the two prior releases. |
National Summary, scored −2 to +2 Macro backdrop | Overall Economic Activity | | +0.25 |
Rose slightly: six districts flat, four modest or moderate growth (Dallas moderate), two slight contractions (Philadelphia, San Francisco). Weaker than January. | Employment nudged up (four up, seven flat, one down), but hiring softened, labor availability improved and firms delayed hiring on uncertainty. | | Inflation Pressure (higher = headwind) | | +1.25 |
Prices rose moderately in most districts and several said the pace picked up; Cleveland input costs reached a strong pace, eggs, freight and insurance surged, and firms expect tariffs to push prices higher. | Mortgage rates ticked up and hurt housing (Atlanta, Dallas); Philadelphia banks tightened criteria and lending fell; Chicago business loan rates rose modestly; New York standards eased and Dallas loan volume kept rising. | Slightly optimistic overall, but less so than January: New York notably less optimistic, St. Louis down to neutral, San Francisco worse, and sharply higher uncertainty led firms to delay hiring and capex. |
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Current conditions in each Fed district District by sector | BOS | NY | PHL | CLE | RIC | ATL | CHI | STL | MIN | KC | DAL | SF |
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| Information TechnologyXLK | · | · | · | · | −1 | · | · | · | · | · | · | · | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | −1 | −1 | +1 | +1 | +1 | · | · | · | · | +2 | · | | Consumer DiscretionaryXLY | · | · | · | −1 | +1 | −1 | · | −1 | −1 | −2 | · | −1 | | Communication ServicesXLC | · | · | · | · | · | · | · | · | · | · | · | · | | IndustrialsXLI | +1 | · | +1 | −1 | · | +1 | −1 | · | · | −1 | · | +1 | | Consumer StaplesXLP | · | · | · | · | · | · | +1 | −1 | · | · | · | +1 | | EnergyXLE | · | · | · | · | · | +1 | · | · | · | · | +1 | · | | UtilitiesXLU | · | · | · | · | · | +1 | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | −1 | −1 | · | −1 | −1 | · | +1 | +1 | · | −1 | | MaterialsXLB | · | · | · | · | · | +1 | · | · | −1 | · | · | · |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Consumer Discretionary −1 broad−based Kansas City, Cleveland, Minneapolis, St. Louis, Atlanta, San Francisco Consumer spending was lower on balance, with increased price sensitivity for discretionary items. Why it matters: Six districts negative and none strongly positive swing Consumer Discretionary from best to below zero. | Consumer Discretionary −2 Kansas City Consumer spending decreased moderately across most categories; consumers pushed back on price increases. Why it matters: The only -2 read in the release. | Financials +2 Dallas Loan volume continued increasing at a rapid pace while loan demand accelerated further. Why it matters: Keeps Financials positive against declines in New York (28% weight) and Philadelphia. | Real Estate −1 San Francisco, Atlanta, Chicago, Cleveland, Philadelphia Housing demand declined as mortgage rates moved higher and affordability diminished. Why it matters: San Francisco (27%) and four others turn Real Estate negative despite Boston's sales surge. | Industrials +1 San Francisco, Boston, Philadelphia, Atlanta Manufacturing improved: capital equipment pipelines and commercial aircraft production picked up. Why it matters: San Francisco (17%) and three others lift Industrials to slightly positive against Midwest declines. | Industrials +1 outlook Boston, Philadelphia, Cleveland, Richmond, St. Louis Manufacturers generally expect modest demand growth, though uncertainty around tariffs is high. Why it matters: Positive outlook breadth supports the Industrials prospect score. |
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Twelve Fed districts District roundup Boston Growing +1.0 Outlook ▲ Increased slowly, boosted by a surge in home sales. |
| New York Flat Outlook ▼ Little changed; businesses notably less optimistic. |
| Philadelphia Contracting −1.0 Outlook ▲ Declined slightly; firms still optimistic about future growth. |
| Cleveland Flat Outlook ▲ Flat; consumer spending down, activity expected to increase. |
| Richmond Growing +1.0 Outlook ▶ Grew modestly; consumer spending slowed, manufacturing flat. |
| Atlanta Growing +1.0 Expanded modestly; retail fell slightly, manufacturing up slightly. |
| Chicago Flat Outlook ▲ Little changed; construction and manufacturing down slightly. |
| St. Louis Flat Outlook ▶ Flat; outlook declined from slightly optimistic to neutral. |
| Minneapolis Flat Steady; manufacturing improved modestly, spending flat. |
| Kansas City Flat Outlook ▶ Unchanged; consumer spending decreased moderately. |
| Dallas Growing +2.0 Outlook ▶ Expanded moderately; lending up notably, sharply higher uncertainty. |
| San Francisco Contracting −1.0 Outlook ▼ Ticked down; retail fell modestly, manufacturing improved. |
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Where the signal is thin or split Divergences to watch | Consumer Discretionary — the strongest sector in January flipped negative; the momentum read captures this turn.
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| | STAPLES vs DISCRETIONARY: essentials held up (San Francisco, Chicago) while discretionary spending weakened, a defensive rotation signal.
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| | Financials — Dallas (+2) offsets New York and Philadelphia (-1); outlook positive in all four districts that gave one.
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| | Information Technology — flat conditions with only Richmond negative; outlook rests on one Dallas comment and falls below coverage.
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| | Health Care — conditions flat everywhere, and the only outlooks (Boston, St. Louis) are negative on federal funding risk, below coverage minimum.
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| | COMMUNICATION SERVICES and UTILITIES: thin coverage; scored 0 except Atlanta utility demand.
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How to read this. Each Fed district’s report is scored −2 (strong contraction) to +2 (strong expansion) for each GICS sector, then weighted by the district’s share of that sector’s activity. The Prospect Score blends current conditions (25%), district outlooks (35%), momentum (20%), a sector-specific macro tilt (10%) and margin pressure (10%). The Beige Book describes regional activity, not earnings or valuations. Weights and sensitivities are illustrative. This newsletter is for information only and is not investment advice. Source: Federal Reserve Beige Book · Scored by EconomyxAI |