The Federal Reserve System released its May 2025 Beige Book yesterday, and the Fed has stopped painting a cheerful picture of the US economy. The Fed reported a worsening economy in six of its twelve districts, specifically Boston, New York, Philadelphia, Minneapolis, Kansas City, and San Francisco. Only the Richmond, Atlanta, and Chicago districts showed improvements in economic conditions.

According to the report summary:

Reports across the twelve Federal Reserve Districts indicate that economic activity has declined slightly since the previous report. … All Districts reported elevated levels of economic and policy uncertainty, which have led to hesitancy and a cautious approach to business and household decisions. Manufacturing activity declined slightly. Consumer spending reports were mixed, with most Districts reporting slight declines or no change; however, some Districts reported increases in spending on items expected to be affected by tariffs. Residential real estate sales were little changed, and most District reports on new home construction indicate flat or slowing construction activity. Reports on bank loan demand and capital spending plans were mixed. Activity at ports was robust, while reports on transportation and warehouse activity in other areas were mixed. On balance, the outlook remains slightly pessimistic and uncertain, unchanged relative to the previous report. However, a few District reports indicate the outlook has deteriorated while a few others indicate the outlook has improved. …

The Fed’s bubble economy has only made all this worse, but the Fed is likely to focus overwhelmingly on tariffs going forward as the economy continued to stagnate and worsen.