Economic Activity Rises in Most Fed Districts as Outlook Improves, Beige Book Shows

03:40 PM EST, 01/14/2026 (MT Newswires) -- Most Federal Reserve districts saw economic activity grow since late November, while the overall outlook was "mildly optimistic," the US central bank said in its latest Beige Book released Wednesday.

Of the 12 districts, eight reported "slight to modest" growth, while three saw no change in activity. One posted a modest drop.

"This marks an improvement over the last three report cycles where a majority of districts reported little change," according to the latest document, prepared by the Richmond Fed based on data collected by Jan. 5.

Employment was mostly unchanged overall, while a "large majority" of districts saw prices rise at a moderate rate, according to the report.

"Outlooks for future (economic) activity were mildly optimistic, with most expecting slight to modest growth in coming months," the Fed said.

The previous Beige Book, which was released Nov. 26, showed that overall prices increased moderately since mid-October, while employment fell slightly. The outlook for economic activity was largely unchanged in that report.

"Most banks reported slight to modest growth in consumer spending this cycle, largely attributed to the holiday shopping season," the latest document showed Wednesday. "Several districts also noted that spending was stronger among higher-income consumers with increased spending on luxury goods, travel, tourism, and experiential activities."

The latest report indicates some improvement in the economy and the labor market, along with "some inflation progress," Sal Guatieri, a senior economist at BMO Capital Markets, said in a note.

Eight districts reported no change in hiring, while wages increased, according to the Beige Book. "(Artificial intelligence's) current impact on employment was limited, with more significant effects anticipated in the coming years rather than immediately."

Tariffs-related cost pressures were "a consistent theme" across districts, according to the document. Several contacts that initially absorbed those costs were now starting to pass them on to customers.

"Looking ahead, firms expect some moderation in price growth, but anticipated prices to remain elevated as they work through increased costs," the Beige Book said.

"Firmer economic growth may be translating into some welcome improvement in labor markets, which should be sufficient to sideline the (Federal Open Market Committee) at month's end," Guatieri said. "At the same time, the peak-tariff effect on inflation could be in the rearview mirror, opening the door for more rate cuts this year."

Markets widely expect the central bank to hold its benchmark lending rate steady later this month, according to the CME FedWatch tool. Last year, the FOMC delivered three back-to-back 25-basis-point interest rate cuts amid concerns about the labor market.

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