Federal Reserve Beige Book Report October 2009 Report

Reports from the 12 Federal Reserve Districts indicated either stabilization or modest improvements in many sectors since the last report, albeit often from depressed levels. Leading the more positive sector reports among Districts were residential real estate and manufacturing, both of which continued a pattern of improvement that emerged over the summer. Reports on consumer spending and nonfinancial services were mixed. Commercial real estate was reported to be one of the weakest sectors, although reports of weakness or moderate decline were frequently noted in other sectors.

Reports of gains in economic activity generally outnumber declines, but virtually every reference to improvement was qualified as either small or scattered. For example, Dallas cited slight improvements residential real estate and staffing firms, while New York noted gains only in a few sectors (predominantly manufacturing and retail). Retail and manufacturing conditions were mixed in Boston, but some signs of improvement were reported. New York, Philadelphia, Cleveland, and San Francisco cited small pickups in manufacturing activity. In the Kansas City District, an uptick was noted in technology firms, while services firms posted revenue gains in Richmond. However, conditions were referred to as stable or flat for business services and tourism firms in Minneapolis and agriculture in St. Louis and Kansas City.

The weakest sector was commercial real estate, with conditions described as either weak or deteriorating across all Districts. Banking also faltered in several Districts, with Kansas City and San Francisco noting continued erosion in credit quality (often with more expected in the future). One bright spot in the banking sector was lending to new homebuyers, in response to the first-time homebuyer tax credit. Finally, labor markets were typically characterized as weak or mixed, but with occasional pockets of improvement.
Districts generally reported little or no increase to either price or wage pressures, but references to downward pressures were occasionally noted. While upward price pressures were generally subdued in most Districts, materials prices increased in Cleveland (mainly for steel) and Kansas City. Manufactured goods prices were flat to up slightly in Boston. Boston reported that in some market segments "product competition and customer clout are leading to downward pressure on prices." Minimal wage pressures were noted in Cleveland and Minneapolis.

In the Philadelphia (Third District) region, economic conditions have shown little change in recent weeks. Manufacturers, on balance, reported a small increase in shipments and a steady rate of new orders. Retailers indicated that sales picked up for the back-to-school shopping period, although there was little improvement compared with a year ago. Motor vehicle dealers indicated that sales declined from August to September as the federal "cash for clunkers" program terminated. Third District banks reported flat loan volume, overall, and further declines in credit quality. Residential real estate agents generally noted steady sales of existing homes. Nonresidential real estate leasing and construction activity declined. Business firms in the region reported mostly level input costs and output prices in September.

The outlook in the Third District business community remained subdued in September. Manufacturers forecast a rise in shipments and orders during the next six months, on balance, although most of those expecting gains believe that they will be slight. Retailers are generally cautious. Although some retailers see signs of rising sales in the fourth quarter, most believe consumers will continue to limit spending. Auto dealers expect sales to remain slow through the rest of the year. Bankers anticipate demand for credit to remain soft while business and consumer confidence continues to be fragile. Residential real estate contacts believe housing demand will continue to stabilize, but they do not expect significant improvement until some time next year. Contacts in nonresidential real estate expect leasing and construction to remain weak into 2010.

Source Beige Book

Click here for the Federal Reserve October 2009 Beige Book [Beige Book Archives]


See related blog articles:
Federal Reserve Beige Book For Economic Conditions (What is the "Beige Book"?)
The Federal Reserve - Making Sense In Plain English



Visit my web site for real estate services and support: LawrenceYerkes.com [NJ/PA]

and visit Besthomes-NJ.com to find the latest New Jersey Real Estate property listings (Residential, Commercial, Multi-Family, Farm, Land).

Copyright 2009 by Lawrence Yerkes. All Rights Reserved.