146 posts on "Regional Analysis"
March 4, 2026
Firms’ Inflation Expectations Return to 2024 Levels
Businesses experienced substantial cost pressures in 2025 as the cost of insurance and utilities rose sharply, while an increase in tariffs contributed to rising goods and materials costs. This post examines how firms in the New York-Northern New Jersey region adjusted their prices in response to these cost pressures and describes their expectations for future price increases and inflation. Survey results show an acceleration in firms’ price increases in 2025, with an especially sharp increase in the manufacturing sector. While both cost and price increases intensified last year, our surveys reveal that these do not contribute to firms believing that inflation will be on the rise in the short or longer term. In fact, firms’ inflation expectations have moderated compared to what was expected a year ago. Firms now anticipate inflation of 3 percent in the year ahead, lower than what was expected last year at this time. Importantly, like last year, longer-term inflation expectations also remain well anchored.
Are Rising Employee Health Insurance Costs Dampening Wage Growth?
Employer-sponsored health insurance represents a substantial component of total compensation paid by firms to many workers in the United States. Such costs have climbed by close to 20 percent over the past five years. Indeed, the average annual premium for employer-sponsored family health insurance coverage was about $27,000 in 2025—roughly equivalent to the wage of a full-time worker paid $15 per hour. Our February regional business surveys asked firms whether their wage setting decisions were influenced by the rising cost of employee health insurance. As we showed in our companion post, respondents reported an average increase in such costs of more than 13 percent this year. Businesses providing insurance to their workers indicated that absent these cost increases, they would have raised wages by roughly an additional percentage point, on average, suggesting that rising health insurance costs resulted in a drag on wage growth for workers at these firms.
Posted at 10:01 am in Labor Market, Microeconomics, New Jersey, New York, Regional Analysis | Permalink | Comments (0)
What’s Driving Rising Business Costs?
After a period of moderating cost increases, businesses faced mounting cost pressures in 2025. While tariffs played a role in driving up the costs of many inputs—especially among manufacturers—they represent only part of the story. Indeed, firms grappled with substantial cost increases across many categories in the past year. This post is the first in a three-part series analyzing cost and price dynamics among businesses in the New York-Northern New Jersey region based on data collected through our regional business surveys. Firms reported that the sharpest cost increases over the past year were for employee health insurance and utilities, followed by business insurance, and goods and materials inputs. Firms expect cost growth to moderate in 2026. Our second post will examine the sharp increase in employee health insurance costs in more detail and show that such rising costs dampened wage growth for some workers. The third post will analyze firms’ pricing behavior in light of these cost pressures, as well as firms’ inflation expectations.
February 3, 2026
New York Fed EHIs Reveal Small Business Struggles
The New York Fed’s Economic Heterogeneity Indicators (EHIs) aim to study macroeconomic outcomes experienced by various groups of people and businesses. We recently added a suite of indicators describing the performance of small businesses to the EHIs—both for the region (defined, for the purpose of this study, as New York, New Jersey, and Connecticut) and nationally. Small businesses are critical to employment generation as they accounted for almost 63 percent of new private sector jobs since 2005 and employed almost 46 percent of all U.S. workers in 2025. Thus, understanding economic trends and impacts for small businesses is important for designing effective monetary policy and aligns with the New York Fed’s mission to support the regional economy. In this post, we highlight some aspects of small business profitability, revenues, employment, and indebtedness since 2019 for firms of different sizes.
September 4, 2025
Are Businesses Scaling Back Hiring Due to AI?
The swift advancement of artificial intelligence (AI) has sparked significant concern that this new technology will replace jobs and stifle hiring. To explore the effects of AI on employment, our August regional business surveys asked firms about their adoption of AI and if they had made any corresponding adjustments to their workforces. Businesses reported a notable increase in AI use over the past year, yet very few firms reported AI-induced layoffs. Indeed, for those already employed, our results indicate AI is more likely to result in retraining than job loss, similar to our findings from last year. That said, AI is influencing recruiting, with some firms scaling back hiring due to AI and some firms adding workers proficient in its use. Looking ahead, however, layoffs and reductions in hiring plans due to AI use are expected to increase, especially for workers with a college degree.
June 4, 2025
Are Businesses Absorbing the Tariffs or Passing Them On to Their Customers?
U.S. import tariffs increased to historically high rates in recent months, raising the costs of many imported inputs businesses use. Businesses subject to these higher costs have been faced with difficult and complex decisions about whether to absorb the tariffs through lower profits, raise their prices to recover the higher costs, or some combination of both. These decisions are influenced by the degree of competition in the marketplace, potential customer reactions, and the ability to maintain profit margins, among other factors. Our May survey of businesses in the New York–Northern New Jersey region asked firms about the tariffs they faced, recent changes in the cost of imported goods, and whether they were passing on tariff-induced cost increases to their customers. Results indicate most businesses passed on at least some of the higher tariffs to their customers, with nearly a third of manufacturers and about 45 percent of service firms fully passing along all tariff-induced cost increases by raising their prices.
March 5, 2025
Firms’ Inflation Expectations Have Picked Up
Editors note: Since this post was published, we clarified language in the first paragraph about year-ahead expectations for manufacturing and service firms in the 2025 survey. We also corrected the y-axis range of Chart 2. (March 5, 11 a.m.)
After a period of particularly high inflation following the pandemic recession, inflationary pressures have been moderating the past few years. Indeed, the inflation rate as measured by the consumer price index has come down from a peak of 9.1 percent in the summer of 2022 to 3 percent at the beginning of 2025. The New York Fed asked regional businesses about their own cost and price increases in February, as well as their expectations for future inflation. Service firms reported that business cost and selling price increases continued to moderate through 2024, while manufacturing firms reported some pickup in cost increases but not price increases. Looking ahead, firms expect both cost and price increases to move higher in 2025. Moreover, year-ahead inflation expectations have risen from 3 percent last year at this time to 3.5 among manufacturing firms and 4 percent among service firms, though longer-term inflation expectations remain anchored at around 3 percent.
September 4, 2024
AI and the Labor Market: Will Firms Hire, Fire, or Retrain?
The rapid rise in Artificial Intelligence (AI) has the potential to dramatically change the labor market, and indeed possibly even the nature of work itself. However, how firms are adjusting their workforces to accommodate this emerging technology is not yet clear. Our August regional business surveys asked manufacturing and service firms special topical questions about their use of AI, and how it is changing their workforces. Most firms that report expected AI use in the next six months plan to retrain their workforces, with far fewer reporting adjustments to planned headcounts.
May 20, 2024
Supply Chain Disruptions Have Eased, But Remain a Concern
Supply chain disruptions became a major headache for businesses in the aftermath of the pandemic. Indeed, in October 2021, nearly all firms in our regional business surveys reported at least some difficulty obtaining the supplies they needed. These supply chain disruptions were a key contributor to the surge in inflation that occurred as the economy recovered from the pandemic recession. In this post, we present new measures of supply availability from our Business Leaders Survey and Empire State Manufacturing Survey that closely track the New York Fed’s Global Supply Chain Pressure Index (GSCPI). We will begin publishing these data on a monthly basis starting in June. These indexes indicate that supply availability had generally been improving since early 2023, but over the past couple of months, improvement has stalled. This trend is concerning since our May Supplemental Survey indicates that between a third and a half of businesses in the region are experiencing difficulties obtaining supplies, and many are reducing operations and raising prices to compensate, though to a lesser extent than a few years ago.
May 7, 2024
Many Places Still Have Not Recovered from the Pandemic Recession
More than four years have passed since the onset of the pandemic, which resulted in one of the sharpest and deepest economic downturns in U.S. history. While the nation as a whole has recovered the jobs that were lost during the pandemic recession, many places have not. Indeed, job shortfalls remain in more than a quarter of the country’s metro areas, including many in the New York-Northern New Jersey region. In fact, while employment is well above pre-pandemic levels in Northern New Jersey, jobs have only recently recovered in and around New York City, and most of upstate New York—like much of the Rust Belt—still has not fully recovered and has some of the largest job shortfalls in the country.
Posted at 11:00 am in Labor Market, New Jersey, New York, Pandemic, Recession, Regional Analysis | Permalink | Comments (1)
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