EconomyxAI · Beige Book Sector Monitor July 2025Released July 16, 2025 · Data through July 7 |
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Conditions index −0.18 avg of 11 sectors, −2 to +2 |
| Outlook index −0.40 sectors with an outlook |
| Districts growing 3/12 per National Summary |
| Positive momentum 3/11 sectors improving |
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This release in brief The read | ■ | Activity rose slightly, with five districts growing, five flat and two declining, an improvement over May. | | ■ | Consumers stayed cautious: nonauto spending softened in most districts and auto sales fell back after the pre-tariff rush; Dallas retail declined notably again. | | ■ | Tariff cost pressure was reported in all twelve districts, and many firms expect consumer prices to rise faster by late summer; some absorbed costs, compressing margins. | | ■ | Real estate split: Cleveland residential and commercial demand grew moderately while Atlanta commercial activity fell moderately and Dallas housing weakened. | | ■ | The outlook was neutral to slightly pessimistic, with only Cleveland and Philadelphia expecting growth; New York turned from deep pessimism to neutral. |
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Sector prospects Where the 3–12 month view points Strongest prospects Financials
XLF
▲ Improving | +0.26 |
| Consumer Staples
XLP
▶ Steady | +0.18 |
| Health Care
XLV
▶ Steady | −0.03 |
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| Weakest prospects | Consumer Discretionary
XLY
▶ Steady | −0.49 |
| Industrials
XLI
▶ Steady | −0.44 |
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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 | Financials
XLF | | +0.26 | Leaning Favorable | +0.17 | −0.53 | ▲ +0.44 | | 2 | Consumer Staples
XLP | | +0.18 | Leaning Favorable | +0.33 | n/a | ▶ +0.22 | | 3 | Health Care
XLV | | −0.03 | Neutral | +0.00 | −1.00 | ▶ −0.04 | | 4 | Communication Services
XLC | | −0.04 | Neutral | −0.08 | n/a | ▶ +0.07 | | 5 | Information Technology
XLK | | −0.04 | Neutral | −0.03 | +1.00 | ▶ −0.01 | | 6 | Utilities
XLU | | −0.08 | Neutral | +0.00 | n/a | ▶ −0.16 | | 7 | Materials
XLB | | −0.24 | Leaning Unfavorable | −0.46 | n/a | ▼ −0.26 | | 8 | Real Estate
XLRE | | −0.31 | Leaning Unfavorable | −0.33 | −0.35 | ▶ −0.20 | | 9 | Industrials
XLI | | −0.44 | Leaning Unfavorable | −0.59 | −0.42 | ▶ −0.14 | | 10 | Consumer Discretionary
XLY | | −0.49 | Leaning Unfavorable | −0.45 | −0.69 | ▶ −0.02 | | 11 | Energy
XLE | | −0.57 | Unfavorable | −0.55 | −0.82 | ▶ −0.63 |
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 |
Increased slightly: five districts grew slightly or modestly (Richmond moderately), five were flat and two declined modestly (New York, Philadelphia). Better than May. | Employment rose very slightly (seven up, three flat, two down), but hiring stayed cautious, firms postponed decisions and some invested in AI and automation to avoid hiring. | | Inflation Pressure (higher = headwind) | | +1.50 |
Seven districts moderate, five modest, similar to May, but all twelve reported tariff-related input cost pressure and contacts expect consumer prices to rise faster by late summer. | Chicago financial conditions loosened and Philadelphia borrowing rates fell on rate-cut expectations, but elevated long-term rates restrained San Francisco C&I demand, Atlanta banks tightened standards and St. Louis reported tighter financing. | Neutral to slightly pessimistic: only two districts expect growth, others flat or slightly weaker; New York moved from deep pessimism to neutral, Dallas remained pessimistic. |
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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 | · | · | · | · | · | · | · | · | · | · | | Health CareXLV | · | · | · | · | · | · | · | · | · | · | · | · | | FinancialsXLF | · | · | −1 | · | · | · | +1 | +1 | · | +1 | +1 | · | | Consumer DiscretionaryXLY | −1 | −1 | −1 | −1 | +1 | · | −1 | · | · | +1 | −2 | · | | Communication ServicesXLC | · | −1 | · | · | · | · | · | · | · | · | +1 | · | | IndustrialsXLI | · | −1 | · | −1 | −1 | · | −1 | · | · | −1 | · | −1 | | Consumer StaplesXLP | · | · | · | · | · | · | +1 | · | · | · | · | +1 | | EnergyXLE | · | · | · | · | · | +1 | · | · | −1 | −1 | −1 | · | | UtilitiesXLU | · | · | · | · | · | · | · | · | · | · | · | · | | Real EstateXLRE | +1 | +1 | · | +2 | · | −2 | · | · | · | +1 | −1 | −1 | | MaterialsXLB | · | · | · | · | · | −1 | · | · | · | · | −1 | −1 |
| Contraction | −2 | −1 | 0 | +1 | +2 | Expansion |
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Top highlights What moved the scores Consumer Discretionary −2 Dallas Retail sales declined notably again in June; auto sales fell after pull-forward buying. Why it matters: Dallas carries 12% of Discretionary weight; the -2 offsets gains in Richmond and Kansas City. | Real Estate −2 Atlanta CRE declined moderately, with industrial at 'recession levels of demand' across the southeast. Why it matters: Atlanta carries 13% of Real Estate weight; one of two -2 reads in the release. | Real Estate +2 Cleveland Residential demand increased moderately and commercial demand grew moderately. Why it matters: Offsets Atlanta; together with Boston, New York and Kansas City keeps Real Estate near zero. | Financials +1 broad−based St. Louis, Kansas City, Dallas, Chicago Bank earnings improved on lower funding costs; loan demand ticked up or accelerated. Why it matters: Four positive districts lift Financials from negative to positive conditions. | Industrials −1 outlook Cleveland, Richmond, Atlanta, Minneapolis, Dallas Manufacturers expect lower demand in the second half after consumers pulled purchases forward. Why it matters: Broad negative outlook keeps Industrials' prospect score below zero. | Industrials −1 Cleveland Transportation contacts reported a steep decline in demand and expect it to continue. Why it matters: Freight weakness signals demand cooling beyond manufacturing. |
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Twelve Fed districts District roundup Boston Flat Outlook ▲ Flat or up slightly; guardedly optimistic outlook. |
| New York Contracting −1.0 Outlook ▶ Declined modestly; businesses became more neutral on the outlook. |
| Philadelphia Contracting −1.0 Outlook ▲ Declined modestly; firms expect slight growth over six months. |
| Cleveland Flat Outlook ▲ Flat; activity expected to increase slightly ahead. |
| Richmond Growing +2.0 Grew moderately; consumer spending up modest to moderate. |
| Atlanta Flat Little changed; consumer softened, tourism up modestly. |
| Chicago Growing +1.0 Outlook ▼ Increased slightly; slight decline expected next year. |
| St. Louis Flat Outlook ▼ Unchanged; outlook highly uncertain and slightly pessimistic. |
| Minneapolis Flat Flat; tourism up, construction and energy down. |
| Kansas City Flat Mostly unchanged, with some rebound in consumer and financial activity. |
| Dallas Growing +1.0 Outlook ▼ Up slightly; retail declined notably, outlooks pessimistic. |
| San Francisco Flat Outlook ▼ Largely stable; contingency planning for higher inflation. |
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Where the signal is thin or split Divergences to watch | Real Estate — widest dispersion of the release, from Cleveland +2 to Atlanta -2; weighted score near zero hides the split.
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| | Financials — conditions improved to positive in five districts while outlooks remain negative on loan demand and credit quality.
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| | CONSUMER DISCRETIONARY vs STAPLES: discount and warehouse stores gained while apparel, autos and travel softened.
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| | Energy — negative in Dallas, Kansas City and Minneapolis on lower oil prices; Atlanta LNG growth the only positive.
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| | Information Technology — San Francisco scored 0 despite AI investment mentions; a +1 there would add about 0.47 to IT conditions.
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| | UTILITIES and HEALTH CARE: no non-zero condition scores this release.
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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 |