Across 11 of the 12 Federal Reserve districts, growth remained consistent despite mounting concerns over global instability. While businesses in sectors ranging from manufacturing to construction continue to grapple with elevated expenses for raw materials, energy, and transportation, the rate of price growth has stalled or decelerated in every region. Several firms explicitly linked this persistent cost pressure to ongoing conflicts in the Middle East and shifting tariff policies.

The labor market continues to demonstrate resilience, with employment gains reported in retail, manufacturing, and construction. Notably, a handful of districts reported that companies are increasingly integrating artificial intelligence into their operations, using the technology to streamline hiring processes or drive worker productivity. Wage growth remains modest to moderate, suggesting that while the labor market is tightening, it is not currently fueling an aggressive inflationary spiral. Looking forward, business expectations remain divided: some firms anticipate inflation will hold steady, while others project a slowdown driven by the recent dip in fuel prices.