Looks like we all opened up our wallets over the all-important holiday season, or at least thatâs one of the takeaways from this yearâs first edition of the Federal Reserve Bank of St. Louisâ Beige Bookâthe report released eight times a year that analyzes conditions in the Fed district covering all of Arkansas, and parts of Illinois, Indiana, Kentucky, Mississippi, Tennessee, and Missouri.
âConsumer spending is always a big driver of economic activity. When you get into December, itâs an even bigger driver of economic activity,â says Chalres Gascon, vice president and economist in the research department of the St. Louis Fed. Other parts of the economy, such as home building or agriculture, are less active this time of year than holiday spending, travel, and tourism.
Gascon says the holiday spending appeared to materialize quite a bit later in the season in 2025.
âWhen you spoke to retailers in late November, things weren't looking great, and there was concern there,â he says. âThings really just kind of picked up in those last couple days before Christmas.â
One contact with the fed even reported the day after Christmas was âone of the busiest days they saw all year.â
Go Deeper: This edition of the Beige Book also conveys a sense of pressure around prices, specifically that businesses didnât feel comfortable or arenât able to pass on increases to consumers to preserve their profit margins. Consumers are quite price-sensitive, Gascon says, âin some cases, walking around the retail shop with their phone out, checking what the next retailer down the street is going to be charging, or what they can buy it for online.â
âIt puts retailers and most household-facing businesses in an environment where they just canât raise their prices much because theyâre going to lose market share,â he adds. And thatâs exacerbated by the current environment where health insurance, utility bills and other essentials costs have been steadily rising for households.
Whatâs Next: Challenges with pricing can trickle into employment, where companies may hold off on hiring as a way to preserve their margins. Gascon says when surveying businesses on their hiring expectations for the year, 20 percent said they expected to cut employment in 2026.
âThereâs definitely a sense that youâre going to see some pull back in the demand for labor as we get into this year,â he says. âA greater share of businesses [are] telling us that theyâre sticking with where their wages are at. And we heard that from staffing contacts as well.â
Even given this, Gascon says many of the Fedâs business contacts have a bit more optimism for the year and will be looking to notch gains and increase productivity. âEric Schmid
