The Federal Reserve’s latest “beige book” report states that the economy continued to expand, but the pace of growth slowed in several regions. The slowdown should come as no surprise, since Bernanke is slowing money growth again.
The following is a district-by-district summary of economic conditions in the 12 Fed districts in July and early August (via WSJ)
Boston: Business contacts say the outlook remains uncertain as tourism businesses and some retailers are reporting strong results, but others are more downbeat. Software and technology firms report that business, while good, is slower than three months ago. Staffing firms say recent results are below expectations.
New York: The economy expanded at a modest pace in the past six weeks, but the labor market appears to be softening, especially outside of manufacturing. Non-auto retailers report some recent improvement and sales at car dealerships are strong. Bankers report increased loan demand, no change in credit standards, and further declines in delinquency rates.
Philadelphia: The region’s economy grew slowly and business contacts’ outlook is less optimistic. Service-sector firms seeing a flattening of growth and manufacturing continues to decline, though the pace is tempering. Residential builders reported a modest increase and construction of homes is moving toward more multifamily buildings and urban locations.
Cleveland: Manufacturing output slowed, but both residential and commercial construction improved, leading to modest growth in the region. Oil and natural gas production increased in the area that includes western Pennsylvania, but coal production is expected to fall behind 2011 levels due in part to reduced demand from Europe and Asia. Input prices were generally stable, although concerns exist about the recent rise in agricultural commodity prices.
Richmond: The labor market weakened but overall economic activity improved in recent weeks. Several small retailers said that they did not hire summer workers and they were not planning additional hiring for the holiday season. Commercial real estate activity remained mixed. An agent in the Washington area reported a drop in office leasing but others noted that, due to the lack of office construction, landlords had been offering fewer incentives to tenants.
Atlanta: Contacts described their short-term outlook for future business activity as restrained and hiring activity remained muted. Retailers, in particular restaurants, were less positive this summer. However, builders are seeing an improvement as new and existing home sales prices were modestly higher than year-ago levels.
Chicago: The pace of growth once again slowed. “Contacts reported heightened concern regarding the risks to the economic outlook, notably the U.S. fiscal situation and weaker growth in Europe and Asia,” the report said. Smaller corn and soybean harvests due to the drought pushed crop prices higher and raised the cost of feeding livestock.
St. Louis: A modest expansion continued and both retail and auto sales rose from a year earlier. Demand for commercial and industrial loans is increasing, and credit standards are unchanged. Some contacts said credit standards for consumer loans eased somewhat, while demand was moderately stronger, especially for auto loans.
Minneapolis: The economy grew at a modest pace, pushed by consumer spending and construction. A Minnesota retailer said back-to-school shopping activity has been positive. Summer tourism activity is up from a year ago. “Fishing license sales and visits to campgrounds and outdoor state parks and recreation areas in South Dakota were on a record pace,” the report said.
Kansas City: Agricultural conditions deteriorated under extreme drought, but the overall economy continued to expand. Most corn and soybean crops were rated in fair or poor condition and herd liquidations amid high feed costs dampened cattle prices. “Escalating production costs were expected to boost farm loan demand in the coming months,” the report said.
Dallas: The economy grew moderately and some contacts saw the job market edging up slightly. Prices have mostly held steady, but rising cost of labor and land prices have increased builders’ costs. Oil-related activity continues to be strong but natural gas prices are depressed. Drilling activity continued to shift from dry natural gas to oil and natural gas liquids.
San Francisco: Economic activity expanded at a modest pace and inflation was small, mainly limited to final goods and services. “Vigorous competition among firms and cost-conscious purchasing behavior by consumers kept price inflation in check,” the report said. Demand for homes continued to improve. However, demand for business loans dropped, signaling growing reluctance by firms to commit to expansion plans.