Wednesday, October 20, 2010

Fed Beige Book: USA Economic Activity Continued to Rise at Modest Pace (Review) *Employment: hiring remains limited*

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Marriner S. Eccles Federal Reserve Board Building in Washington


Fed Beige Book: USA Economic Activity Continued to Rise at Modest Pace


Summary
The Federal Reserve Board issued the much scrutinized Beige Book on  October 20, 2010. Overall, "Reports from the twelve Federal Reserve Districts suggest that, on balance, national economic activity continued to rise, albeit at a modest pace, during the reporting period from September to early October." The Federal Reserve continues with the wording and theme of "modest" and "moderate" regarding economic activity, recovery, and growth. As always, the Fed Beige Book, officially titled the Summary of Commentary on Current Economic Conditions by Federal Reserve District, is carefully worded. 

Regarding the USA Financial System
"Lending activity was stable at low levels across most Districts. Demand for commercial and industrial loans remained weak. On the consumer side, lending was sluggish, but there were scattered reports of improvement. Credit quality changed little on balance."

Regarding Jobs Nationwide
"Hiring remained limited, with many firms reluctant to add to permanent payrolls given economic softness."

Economic Conditions Nationwide by Category Since the Prior September 8, 2010 Report:
Consumer Spending was steady to up slightly
Travel and Tourism activity picked up
Business Spending (no mention)
Nonfinancial Services demand reported to be stable to modestly increasing overall
Manufacturing activity continued to expand
Transportation activity (no mention)
Residential Real Estate: housing markets remained weak
Commercial Real Estate: conditions were subdued
Real Estate Construction conditions expected to remain weak
Banking and Finance: lending activity was stable at low levels
Agriculture conditions were generally favorable
Natural Resources: activity in the energy sector continued to expand
Employment, Wages, and Prices: wage pressures were minimal, prices of final goods and services were mostly stable

Economic Activity and Conditions By Federal Reserve District
(Prior report was September 8, 2010, from information collected on or before October 8, 2010)
Boston: economic activity continues to exceed year-earlier levels
New York: economy continued to expand at a modest pace
Philadelphia: business conditions continue to be mixed
Cleveland: economic activity held steady
Richmond: economic activity continued to be mixed
Atlanta: pace of economic activity remained slow
Chicago: pace of economic activity picked up moderately
St. Louis: economic activity has expanded modestly
Minneapolis: economic growth has picked up somewhat
Kansas City: economy posted moderate but uneven growth
Dallas: economy expanded at a more subdued pace
San Francisco: economic activity appeared to post further modest growth

Conclusion
This October 20 Beige Book, by district economic activity, is more positive than the September 8 report. Economic activity in only 2 of the 12 districts was slow or held steady (Cleveland and Atlanta), compared to 5 in the previous report. 3 districts reported mixed or uneven growth (Philadelphia, Richmond, and Kansas City). The remaining 7 districts reported basically modest improvement of economic activity and conditions. The wording is cautiously optimistic. Overall, there is no robust growth or strong recovery stated or implied.


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