This afternoon, the Federal Reserve released their Beige Book. What’s a Beige Book? It’s their report based on observations and comments from people inside the business world on the state of the economy. I’m going to walk through some “highlights” and “lowlights” of what’s happening. My comments are in bold and italics……
“Reports from the twelve Federal Reserve District Banks indicate that economic conditions remained weak or deteriorated further during the period from mid-April through May.”
No surprise there, at least not for me. So, if conditions remain weak or deteriorated, then where are the gree shoots of recovery that people are talking about?
“However, five of the Districts noted that the downward trend is showing signs of moderating.”
So, let’s think about that. 5 out of 12, that’s 41% show that the pace of downward trend is slowing down. Is that a good thing? Well, let’s look at a couple of other numbers. According to this, 100% of the districts show that they are slowing down. 59% of them are slowing down at the same or faster paces than they were previously.
“Manufacturing declined or remained weak in most Districts.”
Given the shutdowns in the auto industry and the related industries, this certainly isn’t a surprise. What’s going to be interesting is what that shows as Chrysler (and hopefully GM) get back to work after their “furloughs.”
“Nonfinancial Services – Districts reporting on nonfinancial services indicated that for the most part activity continued to decline………In contrast, San Francisco reported a substantial pickup in real estate services such as title insurance due to an increase in home refinancing.
Ooohhh, that illustrates the trouble that we’re in. One of the biggest “improvements” in the non-financial services is the title insurance industry because of mortgage refinancing. Guess what’s not going to last very long due to rising rates…..
Consumer Spending and Tourism
Consumer spending remained soft as households focused on purchasing less expensive necessities…… Several Districts reported that discounters have seen their sales increase, while purchases of luxury goods continued to weaken. Respondents from Boston, Philadelphia, Cleveland, Atlanta, St. Louis, Kansas City, and Dallas expect soft consumer sales to Read more