In Review: President Williams on the Economic Outlook; Rochester and Syracuse Regional Visit; Consumer Outlook Dims; and More

[Federal Reserve Bank of New York]

December 2025   President Williams Discusses the Economic Outlook and Monetary Policy In remarks in New Jersey, President Williams discussed the U.S. economy and how the Fed is working to achieve its dual mandate of maximum employment and price stability. “My assessment is that in recent months, the downside risks to employment have increased as the labor market has cooled, while the upside risks to inflation have lessened somewhat,” he said. “Monetary policy is very focused on bringing these risks into balance.” He added that monetary policy has moved from a modestly restrictive stance toward neutral, and that it “is well positioned as we head into 2026.” On the Ground in Rochester and Syracuse President Williams visited Rochester and Syracuse over two days in late September to gain insights on the Second District economy. In meetings, roundtable discussions, and site visits, local leaders highlighted trends shaping the future of Central New York and the Finger Lakes region. Conversations centered on the region’s high-tech manufacturing, the need for more affordable housing, and approaches to revitalizing city centers. While challenges such as housing and workforce development persist, the area’s commitment to economic growth and community development proved evident. Examining the Intersection of Accounting Standards and Bank Regulation Why does the banking industry remain prone to large and costly disruptions despite being so heavily regulated? A Liberty Street Economics post focused on recent research that combines insights from economics, finance, and accounting to provide a deeper understanding of the challenges involved in designing and implementing bank regulation. “Accounting standards can make it easier or harder for a firm to structure its activities one way while also reporting these activities in a way that complies with regulation,” the author wrote. “The success of bank regulation is strongly influenced by the discretion that accounting standards afford.” Consumer Survey Shows Worsening Financial Expectations The latest Survey of Consumer Expectations shows that labor market expectations improved slightly, but respondents’ perceptions and expectations about their current and future financial situation grew more negative. Expectations about the growth in medical care costs increased to its highest level since January 2014. The mean probability of leaving one’s job voluntarily in the next 12 months (or the expected quit rate) fell to the lowest level since February. Households’ inflation expectations were unchanged at the short-, medium-, and longer-term horizons. Understanding Economic Conditions in the Second District As detailed in the latest Beige Book, which is a qualitative report published eight times a year by the Federal Reserve, economic activity in the Second District declined modestly this reporting period. On balance, employment fell slightly and wage growth remained modest, with some layoffs occurring at major employers in the region. The pace of selling price increases eased slightly, but remained moderate, even as input prices continued to rise strongly. Manufacturing activity increased at a moderate pace, continuing a pickup from the previous period. EMPIRE STATE MANUFACTURING SURVEY   -3.9   Business activity in New York State declined slightly, with new orders holding steady while shipments decreased modestly.     BUSINESS LEADERS SURVEY   -20.0   Business activity declined significantly in the region’s service sector, with the headline index little changed.

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