July 2010 Beige Book, Neither Friend Nor Foe

The Federal Reserve has just released the Beige Book data showing a region by region breakdown of the economy.  The report from the 12 Fed districts shows that the growth in the economy has slowed down to only modest growth.  The opening shows more limited growth in fewer districts rather than a prior growth in almost all sectors.

Economic activity has continued to increase since the earlier survey, although the Cleveland and Kansas City districts were steady.  Districts reporting improvements in economic activity were divided, with a number of them calling their increases as modest.  Atlanta and Chicago said that the pace of economic activity had slowed recently.

Manufacturing activity continued to expand in most districts, although several districts reported that activity had/ leveled off during the reporting period.

Reports on retail sales during the early summer months were generally positive, although in most districts the increases were modest, while auto sales during the early summer months were generally noted a decrease in recent sales.

Nearly all Fed districts reported sluggish housing markets since the homebuyers tax credit expired on April 30.

All 12 districts said that commercial and industrial real estate markets continued to struggle, as vacancy rates were flat to slightly increased and there is continued pressure (downward pressure) on rents.

Banking conditions were largely mixed across all districts.

Activity in the energy sector increased since the previous report, although there was a surprise in the Dallas data showing soft jobs due to offshore oil drilling bans.

Labor market conditions improved gradually in several districts, although the recovery still remains a jobless recovery.  Wage pressures remained largely contained.

Stagflation would imply that there is a slow economy and relatively high unemployment accompanied by a period of inflation.  Right now it is just a stag…

FULL BEIGE BOOK

JON C. OGG