Beige Book Breakdown
According to the Federal Reserve’s October Beige Book, the consumer economy remains uneven amid persistent inflationary pressure and broader economic uncertainty. The Beige Book is unusual among major economic reports in that it is qualitative in nature, relying on input from business and community contacts in each of the nation’s 12 Federal Reserve districts to characterize regional and national economic conditions.
Here are some of the key national-level consumer and retail sector takeaways from the latest report:
- Overall consumer spending showed a modest decline in recent weeks, with consumers becoming increasingly price-sensitive and selective in their purchases.
- Lower and middle-income households exhibited heightened cost-consciousness, actively seeking discounts and delaying discretionary purchases. Retailers reported weaker demand for such everyday consumer goods as food, beverages, clothing, and pet supplies.
- In contrast, affluent consumers maintained spending on premium travel and services. Although demand for essentials like food and clothing softened, luxury goods and athletic footwear remained resilient, buoyed by spending by higher-income groups.
- Restaurants and the hospitality sector face rising input costs but also consumer resistance to higher menu prices. This is prompting such operational adjustments as smaller portion sizes and menu changes.
- Travel-related retail activity weakened, with overall foot traffic in tourist areas down. At the same time, entertainment venues and quick-service restaurants experienced growth through targeted promotions.
- Tariff-related cost increases continue to pressure pricing strategies. While some retailers passed costs to consumers, others absorbed them to maintain competitiveness. Insurance providers noted resistance to premium hikes, with bundling emerging as a common mitigation strategy. Price pressures persisted across sectors, driven by higher costs for important goods and services like insurance and healthcare. While some firms absorbed these costs to maintain competitiveness, many passed them on to consumers, especially in mid- to high-end markets.
Overall, consumer market conditions reflect a bifurcated, K-shaped landscape: resilience in high-end segments contrasts with caution and constraint among broader demographics. The outlook remains mixed, with risks tied to inflation, labor availability, and potential fiscal disruptions.
October 23rd, 2025
