The Federal Reserve Board has released its Beige Book report on economic conditions across the U.S. for the month of August. On balance, the economic recovery continued during the period from mid-July to the end of August. However, the Districts of New York, Philadelphia, Richmond, Atlanta, and Chicago all highlighted mixed conditions or deceleration in overall economic activity.
Based on a quick review of the report, here are some key takeaways for investors:
- Consumer spending help up fairly well, but most spending was focused on necessities and lower priced goods;
- Manufacturing expanded, but at a much slower pace than earlier in the year;
- “Capital spending plans for manufacturers and firms in other industries generally indicate little change or modest increases in coming months, based on reports from the Boston, Philadelphia, Cleveland, Chicago, Kansas City, and San Francisco Districts;”
- Home sales declined from already low levels and demand for commercial, industrial and retail space generally remained depressed;
- Lending standards remained unchanged, but lending activity declined slightly;
- Prices remained tame except for some food commodities and industrial materials;
- Hardly any wage pressures were reported.
Overall, the Beige Book appears to confirm many other economic indicators that suggest the U.S. economic recovery is stalling. That does not mean it is going to fall into recession, but rather there seems to be little room for further expansion in the near term. This is the long, slow slog forward that could be expected coming out of a financial crisis. It is consistent with experiences of other countries following similar crises.
To view the full report in .pdf form, please click the following link: Beige Book (September 8, 2010)
Gregg D. Killoren
victoria1014
