Fed Beige Book November 2025: Economic Stability & Uneven Consumer Spending Impact

The November 2025 Federal Reserve Beige Book (prepared by the San Francisco Fed, data up to Nov 17) indicated economic activity remained little changed, with consumer spending declining overall but resilient for higher-end shoppers [1]. Half the districts noted weaker labor demand, with AI replacing entry-level positions or reducing hiring needs [1]. Market data [0] shows U.S. indices closed higher: S&P500 (+0.5%), NASDAQ (+0.43%), Dow (+0.67%). Sector performance aligned with Beige Book insights: Energy (+2.47%) led, while Consumer Cyclical (-0.295%) lagged. Consumer Staples ETF (XLP) outperformed Discretionary (XLY) (1.17% vs.0.74%), and luxury brand Tapestry (TPR) rose +3.39%—reflecting resilient high-end spending [0].

• Two-Tiered Consumer Market
  : The divergence between staples (XLP) and cyclicals (XLY) confirms uneven spending patterns, with luxury retail (TPR) benefiting from persistent high-end demand.
• AI Labor Impact
  : AI’s role in entry-level job displacement is an emerging trend, potentially pressuring wage growth for lower-skilled workers but improving firm productivity.
• Rate Cut Expectations
  : Traders price an ~80% chance of a December rate cut despite moderate inflation and persistent cost pressures [1].

• Risks
  : AI-driven job displacement in entry-level roles, persistent inflation delaying rate cuts, and softening non-luxury consumer demand impacting cyclical sectors.
• Opportunities
  : Selective opportunities in luxury retail (TPR) and consumer staples (XLP) due to resilient spending patterns.

The Beige Book confirms a stable but uneven economic landscape with two-tiered consumer spending and emerging AI labor impacts. Market reactions reflect these trends, with staples and luxury outperforming cyclicals. While traders expect a December rate cut, inflation concerns persist. This analysis provides objective context for decision-making without prescriptive recommendations.