Economic activity across the United States “declined slightly” in May from April, with the future outlook in negative territory, the Federal Reserve said in its May 2025 Beige Book published on June 4.
The Beige Book, published eight times annually, is a commentary on economic conditions in 12 Federal Reserve districts. In May, “all Districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions,” the report stated.
Manufacturing activity showed a slight decline. Consumer spending reports were mixed, with some districts registering no change or slight declines while others reported higher spending on items likely to be impacted by U.S. tariffs.
“On balance, the outlook remains slightly pessimistic and uncertain, unchanged relative to the previous report,” it said. “However, a few District reports indicate the outlook has deteriorated while a few others indicate the outlook has improved.”
Economic activity declined in six districts: Boston; New York City; Philadelphia; Minneapolis; Kansas City, Missouri; and San Francisco. There was growth in three districts: Atlanta, Chicago, and Richmond, Virginia. Activity was flat in the other districts.
Among the 12 districts, employment remained roughly the same from the last report, with “widespread” reports of businesses delaying hiring due to uncertainty.
“All Districts described lower labor demand, citing declining hours worked and overtime, hiring pauses, and staff reduction plans. Some Districts reported layoffs in certain sectors, but these layoffs were not pervasive,” the report stated.
As for inflation, prices grew at a moderate pace, with “widespread reports” that prices are expected to rise at a faster rate moving forward. Higher tariffs were cited as putting upward pressure on prices.
Agriculture and Small Business
While the Beige Book depicts a slowdown in economic activity, farmers and small businesses have reported increased optimism.
Farmer sentiment in the United States jumped in May from April to the highest level since May 2021, Purdue University said in a June 3 statement.
In May, 52 percent of producers said they expected agricultural exports to surge over the next five years, a large increase from 33 percent in April.
“Key reasons behind the sentiment improvement were a much more optimistic view of U.S. agricultural export prospects, combined with a less negative view of tariffs’ impact on 2025 farm income than respondents provided in either March or April,” the university said.
A May 22 report from S&P Global found that sentiment among companies regarding their output over the coming year “rebounded sharply” in May to hit the highest level since January.
“Sentiment was buoyed in part by reduced trade worries following the pause on additional tariffs and accompanying improved economic growth prospects. Confidence about the outlook rose to a four-month high in services and the best in three months in manufacturing,” it said.
“Goods producers also continued to display relatively greater optimism largely based on hopes of greater reshoring of production and demand switching to domestically produced goods in response to tariffs.”
The Atlanta Federal Reserve’s GDPNow Model is also projecting an optimistic picture of the future. A June 2 update predicts the U.S. economy will grow by 4.6 percent in the second quarter of 2025, up from the 3.8 percent estimate from May.
The stock market is in the green so far this year, with the S&P 500 index up by more than 1 percent as of June 4 since the start of 2025.
US Investments
The current administration has taken steps to boost investment in the country.
On Feb. 21, President Donald Trump signed the “America First Investment Policy” presidential order aimed at making the United States “the world’s greatest destination for investment dollars.”
The policy announced the creation of a “fast-track” process to facilitate greater investments, as well as expediting environmental reviews for investments worth more than $1 billion.
Multiple major companies have already announced large investments in the United States over the past months.
These include a $500 billion investment from Nvidia in artificial intelligence (AI) infrastructure and supercomputers, $500 billion from Apple in manufacturing and training, $150 billion from IBM for manufacturing, $100 billion from TSMC for semiconductor fabrication, $27 billion from pharma corporation Eli Lilly and Company, and $14 billion from Amazon for AI expansion in cloud division and data centers, according to a White House post.
To boost domestic manufacturing, the Small Business Administration (SBA) announced the launch of an onshoring portal on May 20.
“The Make Onshoring Great Again Portal will give job creators a direct line to more than one million domestic suppliers—replacing foreign dependence with access to American-made solutions,” SBA Administrator Kelly Loeffler said.
“It’s a decisive step toward rebuilding our nation’s strength through stronger supply chains, better products, and a renewed commitment to American industry, small business, and workers.”
