Beige Book Shows Slow Growth, Heightened Uncertainty across Fed Districts


The latest release of The Federal Reserve Beige Book indicates the Fed’s 12 Districts continue to experience growth, but the pace of recovery remains lackluster across the majority of areas. However, reports from the Boston and Philadelphia Fed Districts were more mixed. Uncertainty also remains a key concern based on reports from several districts where “recent stock market volatility and increased economic uncertainty had led many contacts to downgrade or become more cautious about their near-term outlooks.” 

In terms of the sectors reported on in the survey, auto sales overcame lingering supply disruptions of Japanese brands and helped to offset flat or weaker demand for non-auto retail goods. In addition, the evacaution and damage associated with Hurricane Irene hurt consumer spending and tourism activity along the East Coast. Conditions for manufacturing activity were reportedly mixed across Fed Districts, with New York, Philly and Richmond indicating declines in activity and Boston and Dallas observing slower demand from European buyers. Manufacturing contacts in several areas did remain upbeat about future capital spending plans. Meanwhile, banks in all Fed Districts except for St. Louis reported stable or slightly weaker loan demand; however, financial services contacts indicated loan quality continued to improve and no appreciable changes in lending standards had been made since the previous report.

Residential real estate market conditions were characterized as weak for the most part in this Beige Book release, with a few isolated signs of improvement. Specifically, the release states:

Residential real estate activity remained weak overall, although a few Districts noted some slight improvements. Contacts in the Boston, Atlanta, Minneapolis, and Dallas Districts reported an increase in home sales over the previous year’s weak levels; however, the uptick in the Atlanta District was concentrated mainly in Florida. The remaining Districts all reported stable or slower sales from the previous survey period, with several citing greater economic uncertainty as the primary cause. Both the New York and Philadelphia Districts reported that a growing backlog of foreclosures in New Jersey continued to weigh down the housing market. Home construction was down or stagnant in most Districts, with the exception of Minneapolis and Kansas City. However, several Districts indicated an improvement in home remodeling activity, and the New York, Philadelphia, and Cleveland Districts reported increased demand for multi-family housing projects.

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