Beige Book is Out

Shawshank, VA 9/7/2011 (PennyPayDay) – The view of the economy presented in the Beige Book today was a step down from the previous issue, which in turn was a slight downgrade from the economic observations made in the report that came out before that one. Although activity is said to have “continued to expand at a modest pace” there were some Districts that “noted mixed or weakening activity.” There is nothing in today’s release that suggests the economy has stopped growing, but there is more nervousness about the future. “Several Districts also indicated that recent stock market volatility and increased economic uncertainty had led many contacts to downgrade or become more cautious about their near-term outlooks.”

As with the last couple of reports the commentary was mixed. “Overall consumer spending increased slightly in most Districts, but non-auto retail sales were flat or down in some Districts.” Some of the differences in consumer spending was regional, while some of it depended on products and incomes, “the Boston and Philadelphia Districts said sales were flat to down but with sizable variation across stores, while sales mostly weakened in the Richmond and St. Louis Districts. Sales of apparel and luxury items were characterized as strong in several Districts. The Boston, Chicago, Kansas City, and San Francisco Districts all noted sluggish sales of big ticket household items such as furniture and appliances, and contacts in several Districts though that heightened consumer anxiety was weighing on sales.”

For the first time in a while the Beige Book was a bit downbeat on the manufacturing sector, “Manufacturing conditions were mixed across the country, but the pace of activity slowed in many Districts.” But, can it be said the report was a bit less so dire for housing, “Residential real estate activity remained weak overall, although a few Districts noted some slight improvements”…well, maybe a little.

In regards to the areas covered by the Fed’s dual mandate, not much of a change. The “labor markets were generally steady”, but is that really a compliment? There was some give and take on prices; “the majority of Districts reported fewer price pressures”, which is good; but “input costs continued to rise in select industries” which is not so great.

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