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Beige Book: Most Districts See Modest Increases in Activity

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Most of the District commentary in today’s Federal Reserve Beige Book read the same. Ten of the twelve Federal Reserve Districts reported modest increases in economic activity, with Philadelphia reporting a slight decline and San Francisco posting unchanged conditions. All Districts however, reported flat, stable, low hire/low fire labor markets. Manufacturing activity was generally reported stronger, but consumer spending was mixed, with K-shaped consumption evidenced across all Districts. The high-income consumers continue to spend freely, with “unapologetic luxury” spending noted in the Atlanta District. At the same time, moderate income consumers are reducing trip frequency and generally “squeezing more life out of every dollar before deciding to spend it” as one Kansas City District respondent put it, while the lower income tier is struggling. Ports remain under some pressure from tariffs and fuel prices, although the comments from the New York and Atlanta Districts in that regar...
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UCLA Anderson: Top Risk Shifts From Tariffs to Oil

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The “outlook for California is slightly weaker than it was three months ago” according to the latest UCLA Anderson Forecast . The Forecast projects that California’s “bifurcated economy” will continue to outperform the US in terms of output and income growth, but that this will be principally driven by the AI, aerospace and tech industries, while the other sectors of the state's economy will struggle. The authors note that California’s unemployment rate has been above 5% for 27 months, indicating a challenged labor market, and that the state is disproportionately affected by high energy prices due to its low emissions fuel mix requirement and its significant energy-dependent trade, transportation, and logistics sectors. At the same time, they cite the negative impact of current federal immigration policy on the state’s important construction sector. The Forecast calls for non-farm payroll growth of 1.2% in 2026 and 1.5% in 2027.
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Nevada Economist: High State Unemployment Not a Bad Thing

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In what sounds almost like a Yogi-ism (it’s so crowded nobody goes there anymore), the Nevada state economist says that the state’s relatively high unemployment rate is actually a good thing, meaning, it's high for a good reason. Nevada’s unemployment rate was 5.3% as of April 2026, one percentage point higher than the US average, but David Schmidt, chief economist at the Nevada Department of Employment, Training, & Rehabilitation, attributes this to domestic immigration rather than a poor state employment market. His point is well taken, as Nevada’s labor force increased by over 37,000 y/y in April (SA), while its unemployed count increased by only about 1,800 over that period, according to the USBLS. Further, Nevada was the only state to see a y/y gain in employment in April. Schmidt also notes that the state’s 63.6% labor participation rate is notably higher than the US rate of 61.8%.
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WalletHub Releases State Rankings

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As a general rule, I’m not a big fan of these commercially produced “first-to-worst” state rankings. More often than not, they’re Frankenstein's monster concoctions that reflect the biases and agendas of the individual or organization that constructs them. They’re generally little more than marketing gimmicks that principally serve only to generate much needed content for political press releases. The latest of these was released by WalletHub yesterday. I’ll give these guys points for being transparent about their methodology and in fairness, the majority of the metrics they are utilizing for their analysis are straightforward and objective, and are not too dissimilar to what most pros would look at. In this way, the WalletHub product seems less ideological and gimmicky than some of the other state-by-state rankings out there. You can find a link to the WalletHub release here .  
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KC Fed Services: Current Conditions Up but Expectations Down

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According to the most recent Federal Reserve Bank of Kansas City’s Services Survey , service sector activity in the Tenth Federal Reserve District increased modestly in May. The top line services composite index (SA) increased to 10 in May from 3 in April and 15 in March, while the  general revenue/sales index rose to 12 from 6. The employee count and hours worked indexes moved modestly positive after falling into negative territory in April. Despite this improvement in current conditions, the six-month expectations indexes generally ticked lower, with the forward composite index falling to 11 from 22, and the revenue/sales expectations index declining to 16 in May from 34 in April. The employment expectations indexes were mixed with employee count moving slightly lower and hours worked moving slightly higher m/mn. However, the part-time employment expectations index dropped to -8 from 10. Capex expectations increased to 17 from 1, a level more consistent with the prints for this i...
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BLS: DC, Arizona, and California Saw the Largest Productivity Gains in 2025

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The US Bureau of Labor Statistics released its report on 2025 state productivity this week. The BLS calculated output and hours worked to determine the labor productivity of each state. By this methodology, the states that saw increases in output together with decreases in hours worked had the highest levels of productivity. According to the BLS calculations, the District of Columbia experienced the highest y/y growth in productivity in 2025 at 5.2%, followed by Arizona (4.4%), and California (4.2%). Alaska had the highest level of output growth at 3.8%, but its 6.2% increase in hours worked caused its productivity to decline 2.3% y/y, making it second only to Idaho (-2.5%) in the level of productivity decline in 2025. In all, eight states posted decreases in productivity in the year. Oregon saw the largest y/y reduction in hours worked and, together with its output increase of 1.2%, put its productivity growth just behind the leaders and even with Massachusetts at 3.7% The report als...
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Strong April Philly Fed

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The Federal Reserve Bank of Philadelphia’s State Coincident Indexes improved notably in April, as the three-month diffusion index rose to its highest level since January 2025. The index increased 14 points m/m to 90 in April from a revised 76 in March, with only two states, Connecticut and Hawaii, posting index declines. Washington State’s index remained flat over the three-month period, but the indexes of all other states improved. West Virginia, North Dakota, and Idaho posted the strongest three-month index gains in the month. The exhibit below is reproduced from the press release.
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