US economic growth was lukewarm across the country in February as hiring remained flat and tariffs increased costs for businesses, according to the Federal Reserve’s Beige Book released on Wednesday.

Seven of the Fed’s districts saw modest growth increases, while five districts saw flat to declining growth, the Fed’s summary of national and regional economic activity stated.

While consumer spending increased slightly, many districts noted that uncertainty and price sensitivity dampened sales, as lower-income consumers pulled back on spending. Severe winter storms also contributed to slower retail traffic.

Read more: What is the Fed’s Beige Book, and what does it say about the state of the economy?

Nine of the Fed’s 12 bank districts mentioned that tariffs contributed to increased costs for businesses. Some continued to pass tariff-related cost increases to their customers, while others began doing so after absorbing prior price increases. Yet some companies opted to hold prices steady despite higher costs because customers wouldn’t swallow higher prices.

Overall, companies expect prices to rise at a somewhat slower pace in the near term.

The job market was stable in recent weeks, with seven of the 12 districts reporting no change in hiring, as businesses dealt with softer demand or uncertainty about the overall economic outlook. Companies in some districts turned to artificial intelligence and other forms of automation to improve efficiency, with most aiming to boost productivity rather than replace workers.

Manufacturing activity improved since January, with eight districts reporting varying degrees of growth and two reporting declines. Manufacturers in many districts reported increases in new orders, and several cited boosts in demand from data centers and, relatedly, energy infrastructure.

Fed officials will use this anecdotal evidence, along with official data, as they set interest rates at their next meeting on March 18. The central bank is expected to hold rates steady for the second policy meeting in a row this year.

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