EconomyxAI · Beige Book Sector Monitor February 2026Released March 4, 2026 · Data through February 23 |
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Conditions index +0.06 avg of 11 sectors, −2 to +2 |
| Outlook index +0.22 sectors with an outlook |
| Districts growing 7/12 per National Summary |
| Positive momentum 6/11 sectors improving |
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This release in brief The read | ■ | Activity rose slightly to moderately in seven districts, while five were flat or declining, up from four last time. | | ■ | Consumer spending rose slightly on balance but was dampened by winter storms, uncertainty and lower-income pullback; auto sales were mostly down on affordability. | | ■ | Manufacturing improved, with eight districts growing and new orders up, helped by data centers and energy infrastructure; Dallas manufacturing 'vigorously rebounded'. | | ■ | Employment was generally stable (seven districts no change), with AI adopted mainly for productivity; wages rose modestly to moderately. | | ■ | Prices rose moderately in eight districts with tariffs cited in nine, but many firms held prices on price-sensitive customers; firms expect somewhat slower price growth, and outlooks were optimistic overall. |
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Sector prospects Where the 3–12 month view points Strongest prospects Industrials
XLI
▲ Turning up | +0.34 |
| Communication Services
XLC
▲ Turning up | +0.26 |
| Utilities
XLU
▶ Steady | +0.20 |
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| Weakest prospects Information Technology
XLK
▼ Turning down | −0.28 |
| Health Care
XLV
▶ Steady | −0.16 |
| Consumer Discretionary
XLY
▼ Turning down | −0.03 |
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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 | Industrials
XLI | | +0.34 | Leaning Favorable | +0.45 | +0.49 | ▲ +0.47 | | 2 | Communication Services
XLC | | +0.26 | Leaning Favorable | +0.22 | n/a | ▲ +0.37 | | 3 | Utilities
XLU | | +0.20 | Leaning Favorable | +0.34 | n/a | ▶ +0.10 | | 4 | Financials
XLF | | +0.20 | Leaning Favorable | +0.04 | +0.68 | ▶ −0.11 | | 5 | Materials
XLB | | +0.12 | Neutral | −0.22 | n/a | ▲ +0.24 | | 6 | Energy
XLE | | +0.08 | Neutral | +0.28 | −0.41 | ▲ +0.59 | | 7 | Real Estate
XLRE | | −0.01 | Neutral | −0.08 | +0.14 | ▶ −0.01 | | 8 | Consumer Staples
XLP | | −0.02 | Neutral | +0.12 | n/a | ▶ +0.09 | | 9 | Consumer Discretionary
XLY | | −0.03 | Neutral | −0.10 | +0.27 | ▼ −0.07 | | 10 | Health Care
XLV | | −0.16 | Leaning Unfavorable | +0.02 | −0.15 | ▶ −0.07 | | 11 | Information Technology
XLK | | −0.28 | Leaning Unfavorable | −0.36 | +0.50 | ▼ −0.40 |
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 |
Seven districts grew slightly to moderately (Dallas moderately), but districts reporting flat or declining activity rose from four to five (New York, Minneapolis and San Francisco declined). Slightly weaker breadth than January, offset by a broad manufacturing pickup. | Employment generally stable with seven districts unchanged; Philadelphia rose modestly, Richmond and Dallas slightly; Boston, Minneapolis edged down. Low-hire, low-fire. | | Inflation Pressure (higher = headwind) | | +1.00 |
Prices rose moderately in eight districts, with tariffs cited in nine and metals prices rising robustly in Dallas; but many firms held prices on price sensitivity and firms expect a somewhat slower pace. Unchanged from January. | Financial services stable to up with commercial lending strongest; Chicago financial conditions loosened modestly, loan rates fell, Dallas and Kansas City loan demand rose; tighter standards in San Francisco, St. Louis and Dallas. | Optimistic: most districts expect slight to moderate growth; St. Louis outlook improved to cautiously optimistic, Boston improved, San Francisco improved, Philadelphia manufacturers' optimism widened (60% expect more orders); Kansas City expectations softened. |
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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 | · | · | · | · | · | +1 | · | · | · | · | −1 | | Health CareXLV | +1 | −1 | · | · | · | +1 | · | · | · | −1 | · | · | | FinancialsXLF | · | −1 | · | +1 | · | +1 | +1 | · | · | +1 | +1 | · | | Consumer DiscretionaryXLY | · | · | · | −1 | · | +2 | · | · | −1 | · | · | −1 | | Communication ServicesXLC | · | +1 | · | · | · | · | · | · | · | · | +1 | · | | IndustrialsXLI | +1 | · | +1 | +1 | −1 | · | +1 | +1 | −2 | · | +2 | · | | Consumer StaplesXLP | · | +1 | · | · | · | +1 | · | · | · | · | −1 | · | | EnergyXLE | · | · | · | · | · | +2 | · | · | +1 | +1 | · | · | | UtilitiesXLU | · | · | · | · | · | +1 | · | · | · | · | · | +1 | | Real EstateXLRE | −1 | +1 | −1 | · | +1 | · | +1 | +1 | −1 | · | · | −1 | | MaterialsXLB | · | · | · | · | · | · | · | · | · | · | · | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Information Technology −1 San Francisco Layoffs largely concentrated in the technology sector, particularly in the Pacific Northwest. Why it matters: San Francisco carries 47% of IT weight; this one -1 turns weighted IT negative despite positives in Boston and Chicago. | Industrials +2 Dallas Manufacturing output grew robustly; activity 'vigorously rebounded' with new orders accelerating. Why it matters: The strongest Industrials read in the series, from a 12% weight district, lifting Industrials conditions and momentum. | Industrials +1 broad, outlook +0.5 to +1 Philadelphia, Cleveland, Boston, New York, St. Louis Eight districts reported manufacturing growth; 60% of Philadelphia firms expect more orders. Why it matters: Breadth plus forward optimism makes Industrials a top momentum sector. | Energy +2 / +1 Atlanta, Kansas City Energy demand grew moderately; oil prices rose above breakeven, supporting more drilling. Why it matters: Flips Energy conditions positive, but Dallas (45%) stays flat with downside price risk. | Financials +1, outlook +1 Dallas, Cleveland Bankers expect 'sizeable growth' in loan demand six months out; Cleveland expects moderate growth. Why it matters: Positive conditions and the strongest district outlooks lift the Financials prospect score. | Consumer Discretionary +2 Atlanta Retailers reported modest to moderate sales growth; tourism grew at a moderate pace. Why it matters: Atlanta (12% weight) is the only strong Discretionary read in a weak release. |
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Twelve Fed districts District roundup Boston Flat Outlook ▲ Flat on balance; outlook improved as uncertainty eased. |
| New York Contracting −1.0 Outlook ▲ Declined modestly despite a small manufacturing pickup. |
| Philadelphia Growing +1.0 Outlook ▲ Grew modestly, up from a slight pace. |
| Cleveland Growing +1.0 Outlook ▲ Increased modestly on data center demand. |
| Richmond Growing +1.0 Continued to grow modestly; CRE up moderately. |
| Atlanta Growing +1.0 Outlook ▶ Expanded at a modest to moderate pace. |
| Chicago Growing +1.0 Outlook ▲ Increased slightly; slight increase expected next year. |
| St. Louis Flat Outlook ▲ Unchanged but expected to increase; cautiously optimistic. |
| Minneapolis Contracting −1.0 Outlook ▲ Fell slightly; consumer spending and construction down. |
| Kansas City Growing +1.0 Outlook ▼ Increased slightly; energy up on higher prices. |
| Dallas Growing +2.0 Outlook ▶ Expanded moderately; manufacturing vigorously rebounded. |
| San Francisco Contracting −1.0 Outlook ▲ Contracted slightly; tech layoffs, K-shaped spending. |
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Where the signal is thin or split Divergences to watch | Information Technology — Boston and Chicago are positive, but San Francisco's -1 on tech layoffs carries 47% weight, so weighted IT turns negative while the unweighted average is slightly positive.
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| | Industrials — Dallas +2 and five +1 districts make this the broadest manufacturing improvement in the series, with outlooks positive in ten districts; Minneapolis -2 is the main drag.
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| | Energy — conditions turn positive (Atlanta +2, Kansas City and Minneapolis +1) while Dallas (45%) sits at 0 with a slightly negative outlook; the improvement rests on higher prices.
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| | Consumer Discretionary — Atlanta +2 is offset by negatives in Cleveland, Minneapolis and San Francisco (26% weight); weather, immigration enforcement and K-shaped spending weigh.
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| | Health Care — current activity mixed, but forward commentary on rural hospital distress and expiring ACA subsidies is negative.
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| | UTILITIES and COMMUNICATION SERVICES: thin coverage; Atlanta and San Francisco utilities, and New York and Dallas information, are the only reads.
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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 |