Fed Beige Book Finds Malaise

A roundup of economic activity completed about every six weeks by the Federal Reserve found that about half of its 12 districts were experiencing slow or stagnant economic growth. There were even some reports of slowing growth during the period in some places, including the Philadelphia district, during the period that began in mid-July and ended in late August.

The Federal Reserve's Beige Book report contained a bit of the same old story: commercial and residential real estate were considered weak, an employment growth rebound has yet to come to fruition and business loan demand is far from robust. What is of note is the continued slide of the manufacturing sector, which had carried economic growth during much of the last two years. Fed contacts illustrate that conditions remain mixed, but the pace of activity has slowed in many districts, including several key ones. Notably, the pace has dropped off in the key New York, Philadelphia and Dallas districts. Districts such as Boston and Dallas also noted a decline in demand from European-based customers. However, at least four districts (Minneapolis, Kansas City, San Francisco, St. Louis) reported increases, albeit mild ones.

Additionally, contacts told the Fed that an uptick in economic uncertainty and the rollercoaster-ride of the stock market has caused them to downgrade their near-term outlooks. In a spot of good news, it appears credit quality has improved, and availability has not worsened, the Fed noted.

Meanwhile, the agriculture sector, like most others, appeared to be a mixed bag as well. Hot and dry weather has been causing problems for producers in the Chicago, St. Louis, Kansas City and, especially, Dallas districts. Still, those who’ve weathered overly dry or, on the opposite end, wet conditions from Hurricane Irene, have high values for their products.

Brian Shappell, NACM staff writer