Fed Beige Book November 2025: Retail Sector Impact of Government Shutdown and Market Reactions

The Federal Reserve’s November 2025 Beige Book, released on November 26, noted some retailers experienced negative impacts from the 43-day U.S. government shutdown (October 1–November12,2025) on consumer spending, with wealthier consumers sustaining higher-end retailer sales while overall spending remained under pressure [1][2]. On the same day, the Consumer Cyclical sector (including most retailers) declined by -0.295%—the worst-performing sector—while the Consumer Defensive sector rose +1.405% as a safe-haven asset [0]. Contrasting sector trends, discount retailers posted strong gains: Walmart (WMT) +1.90%, Target (TGT)+3.92%, Macy’s (M)+3.64%, Kohl’s (KSS)+8.97%—likely driven by pre-Black Friday (November27) optimism [0]. Over the prior 7 days, WMT rose +7.74% and TGT +1.75%, indicating post-shutdown recovery momentum [0].

Cross-domain connections emerge: the shutdown’s consumer spending pressure clashes with holiday season optimism, creating sector divergence (Consumer Cyclical down but discount retailers up). Higher-end retailers showed resilience per the Beige Book, while discount retailers benefited from cost-of-living concerns and pent-up demand post-shutdown [2].

: The Beige Book’s weakening consumer spending signal may indicate broader economic weakness if trends persist beyond the holiday season [2]. Sector divergence (cyclical decline vs individual retailer gains) warrants caution as short-term optimism may not offset structural risks [0].
: Discount retailers’ pre-Black Friday momentum presents near-term upside, while the Consumer Defensive sector offers safe-haven potential amid uncertainty [0].

Key data points: 43-day shutdown duration [1], Consumer Cyclical sector decline (-0.295%) [0], discount retailer gains (WMT +1.90%, TGT+3.92% [0]). Critical factors to monitor: Black Friday/holiday sales data, retailers’ Q4 earnings reports, next Fed Beige Book, and consumer confidence indices.