A Dark Beige Report
by Charles Lemos, Thu Jul 29, 2010 at 07:01:42 AM EDT
Commonly known as the Beige Book, this report produced by the nation's central bank covers economic conditions in all 12 Districts that are part of the Federal Reserve system. It is published eight times per year. The latest report, published on Wednesday, describes the economy as struggling under the weight of a depressed real estate market, continued high unemployment with consumers largely wary and lacking confidence with many consumers still reluctant to spend because of worries about the job market.
Two of the Federal Reserve 12 districts — Atlanta and Chicago — reported that "the pace of economic activity had slowed recently," while the Cleveland and Kansas City districts said that "activity generally held steady."
The other eight districts — including San Francisco, which covers California and other Western states — reported "improvements in economic activity" from the spring, the Fed said. But it added that "a number of them noted that the increases were modest."
More from the New York Times:
The manufacturing sector especially appears to be losing steam. The Federal Reserve regional report, said manufacturing activity in most of the 12 districts experienced some growth since the last report in early June.
But the pace of activity “slowed” or “leveled off” in half of them, including Cleveland and Chicago. In both cities, automobile manufacturing grew, while steel manufacturing declined.
Business contacts in Atlanta and Chicago said economic activity slowed in June and July, with significant worries in Atlanta related to the Gulf Coast oil spill.
Analysts say the book offers a qualitative, rather than quantitative, general overview of various sectors and regions across the country.
The report said the retailing and transportation service sectors showed signs of solid growth. Several districts reported that apparel, food and other necessities were strong sellers. However, consumer spending on big-ticket items was weak, reflected in the decline in auto sales in New York, Philadelphia, Cleveland, Richmond, Chicago and San Francisco. The report also said consumers remained price conscious as they continued to reduce their debts.
Almost all districts reported that they had “sluggish” housing markets as a result of the April expiration of the government’s homebuyer credit. Commercial and residential construction activity was weak in almost all districts. Cleveland, in particular, said it did not expect an improvement in new home construction this year.
The Beige Book report also noted that labor market conditions “improved gradually” in New York, Chicago, Minneapolis, Richmond, and Atlanta, but that San Francisco reported high levels of unemployment. California remains the state with the third-highest unemployment rate in June at 12.3 percent seasonally adjusted. Nevada had the highest rate, with 14.2 percent, followed by Michigan at 13.2 percent. Not surprisingly, wage pressures remained largely contained across most Districts.
Retail sales, the largest component of the US economy, were higher than year-earlier sales in the New York, Philadelphia, Minneapolis, and Kansas City Districts, while Dallas reported solid gains. But sales in the Boston District were mixed compared with the previous year. Recent sales increased slightly in the Cleveland, Atlanta, Chicago, and San Francisco Districts; sales in the Richmond District weakened; and sales in the Kansas City District were flat compared with the previous report. Several Districts cited apparel, food, and other necessities as recent strong sellers, while big-ticket items were weak sellers.
The report is likely to give credence to those have been arguing that US economy faces continued weakness and that efforts to rein in the deficit may further undercut the economic recovery which remains tepid and jobless.