Wednesday, June 8, 2011

Fed Beige Book: "USA Economic Activity Generally Continued to Expand" (Review) "Labor markets continued to improve"

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Marriner S. Eccles Federal Reserve Board Building in Washington


Summary
The Federal Reserve Board issued the much scrutinized Beige Book on June 8, 2011. Overall, across the 12 Federal Reserve Districts, "economic activity generally continued to expand." The Federal Reserve wording and theme continues positive 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.

USA Financial System
"Loan demand was steady to stronger in most Districts, especially in the commercial and industrial sector, and widespread improvement was reported in credit quality."

USA Jobs Nationwide
"Labor market conditions continued to improve gradually across most of the nation, with a number of Districts noting a short supply of workers with specialized technical skills."

Supply Chain Disruption
"Widespread supply disruptions - primarily related to the disaster in Japan - were reported to have substantially reduced the flow of new automobiles into dealers' inventories, which in turn held down sales in some Districts."

Economic Conditions Nationwide by Category Based on Information On or Before May 27, 2011:
Consumer Spending: "Consumer spending was generally described as steady to up modestly"
Automobile Sales: "Auto sales were mixed but fairly robust in most of the country"
Travel and Tourism: "improved in most Districts"
Residential Real Estate: "continued to show widespread weakness, except in the rental segment"
Commercial Real Estate: "generally been steady"
Agriculture: "conditions were unfavorable across much of the nation"
Natural Resources: "energy industry showed continued strength, with robust expansion in oil drilling and extraction activity"
Professional and Nonfinancial Services: "continued to strengthen in most Districts"
Manufacturing activity: "continuing to increase"
Transportation activity: "Reports from transportation services firms were mostly positive."
Banking and Finance: "loan demand as mixed or slightly improved"
Employment: "Labor market conditions continued to improve gradually across most of the nation"
Wages: "growth generally remained modest"
Prices: "widespread increases in commodity prices"

Economic Conditions By Federal Reserve District Based on Information On or Before May 27, 2011
Boston: improving economic conditions
New Yorkeconomy has continued to expand
Philadelphia: business activity has improved overall
Clevelandeconomic activity continued to expand at a modest pace.
Richmond: economic activity has been sending increasingly mixed signals
Atlantaeconomic activity moderated somewhat
Chicago: economic activity expanded more slowly
St. Louis: economic activity continued to expand at a moderate pace
Minneapoliseconomy activity grew steadily
Kansas City: growth in the economy remained solid
Dallaseconomy expanded at an accelerated pace
San Francisco economic activity continued to expand at a moderate pace

Conclusion
This May 27, 2011 Beige Book, by district economic activity, is not as positive as the previous April 13 and March 2, 2011 reports, which were the most positive post-recession reports so far. 2 of the 12 districts (Richmond and Atlanta) reported mixed and moderating activity, respectively. 3 of the 12 districts (New York, Philadelphia, and Chicago) reported "some slowing in the pace of growth". That leaves 7 districts where economic growth was increasing.


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