Fed's Beige Book Out

Conditions in the US economy continued to be extremely difficult in the month to August 25 amid sluggish consumer spending, declining manufacturing activity and slow demand for property, according to the Fed's Beige Book.

Inflation remained a big concern, according to the Fed, which noted almost all districts reported price pressures from high costs of commodities such as food and energy. Of course, as we have pointed out, the current price inflation is the result of Fed policies over the last few years, BUT not the Fed policy over the last three or four months, which has shown a remarkable decline in Fed Money printing. The remarkable situation now exists where the Fed may attempt to keep interest rates at current levels or raise them to fight inflation, when current policy is already extremely tight and if simply maintained will lead to recession/depression.

Which is why, the Beige Book appeared very downbeat on credit conditions. It said that loan demand was easing in most districts, particularly for residential property and consumer loans. It said lending to businesses was “mixed” but that commercial real estate activity was slow in most areas, as demand for office and retail space weakened.