""Employment declined slightly over the current period," the report said, with around half of the Federal districts noting weaker labor demand. "More districts reported contacts limiting headcounts using hiring freezes, replacement-only hiring, and attrition than through layoffs," the Beige Book added. "In addition, several employers adjusted hours worked to accommodate higher or lower than expected business volume instead of adjusting the number of employees. A few firms noted that artificial intelligence replaced entry-level positions or made existing workers productive enough to curb new hiring.""
"If a company wants to reduce its headcount, there are several levers it can pull. It could freeze hiring in order not to grow any further; or when people leave the business, their roles may not be replaced. In 2025, there's another option: Use AI to replace some of the roles managers would have otherwise recruited for. According to the Fed's latest Beige Book, businesses are doing all of the above (and more) to try and avoid announcing mass layoffs."
Companies are reducing headcount through hiring freezes, replacement-only hiring, attrition, trimmed hours, and AI-driven role elimination. The Fed's Beige Book reports employment declined slightly and half of Fed districts noted weaker labor demand. More districts constrained headcounts through hiring freezes and attrition rather than layoffs. Several employers adjusted hours worked to match business volume instead of cutting employee numbers. A few firms reported AI replacing entry-level positions or boosting productivity enough to curb new hiring. Consumer confidence shows fewer respondents say jobs are plentiful, while reports of jobs being hard to get remain steady.
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