Federal Reserve Beige Book Report December 2009 Report

Reports from the twelve Federal Reserve Districts indicate that economic conditions have generally improved modestly since the last report. Eight Districts indicated some pickup in activity or improvement in conditions, while the remaining four--Philadelphia, Cleveland, Richmond, and Atlanta--reported that conditions were little changed and/or mixed.

Consumer spending was reported to have picked up moderately since the last report, for both general merchandise and vehicles; a number of Districts noted relatively robust sales of used autos. Most Districts indicated that non-auto retailers were holding lean inventories going into the holiday season. Tourism activity varied across Districts. Manufacturing conditions were said to be, on balance, steady to moderately improving across most of the country, while conditions in the nonfinancial service sector generally strengthened somewhat, though with some variation across Districts and across industries. Residential real estate conditions were somewhat improved from very low levels, on balance, led by the lower end of the market. Most Districts reported some pickup in home sales, though prices were generally said to be flat or declining modestly; residential construction was characterized as weak, but some Districts did note some pickup in activity. Commercial real estate markets and construction activity were depicted as very weak and, in many cases, deteriorating.

Financial institutions generally reported steady to weaker loan demand, continued tight credit standards, and steady or deteriorating loan quality. In the agricultural sector, the fall harvest was delayed in the eastern half of the nation due to excessively wet conditions during October and early November. Most energy-producing Districts noted a slight uptick in activity in the sector since the last report. Labor market conditions remained weak since the last report, though there were signs of stabilization and scattered signs of improvement. While some Districts reported upward pressure on commodity prices, they saw little or no indication of upward wage pressures or of any significant increase in prices of finished goods.

In the Philadelphia (Third District) region, economic conditions have been mixed in recent weeks. Manufacturers, on balance, reported an increase in shipments and a steady rate of new orders. Retailers indicated that sales have been rising slowly, although they remained below the year-ago level for most stores. Motor vehicle dealers indicated that sales have improved somewhat, although dealer closings continued. Third District banks generally reported decreasing loan volume outstanding and further declines in credit quality. Residential real estate agents and home builders noted mostly unchanged sales rates. Nonresidential real estate leasing and construction activity continued to decline. Service-sector firms generally reported that activity continued to be slow. Business firms in the region reported mostly level prices, although some indicated that prices of some basic commodities have increased recently.

The outlook in the Third District business community remained lackluster in November. Manufacturers forecast a rise in shipments and orders during the next six months, on balance, although the balance of positive views has eased in the past month. Retailers have mixed views, but on balance they expect sales for the holiday shopping period this year to roughly match last year. Auto dealers expect sales to improve in the near-term, although they say the number of dealers remaining in business will continue to decline. Bankers anticipate demand for credit to remain weak though the winter. Residential real estate contacts believe housing demand will continue to firm up, but they do not expect a substantial increase in sales until sometime next year. Contacts in nonresidential real estate expect leasing and construction to remain weak well into 2010. Service-sector firms expect activity to remain near current levels in the near term.

Source Beige Book

Click here for the Federal Reserve December 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



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