The Fed’s Beige Book painted an optimistic picture of the nation’s economy as half of the districts in the Federal Reserve’s system reported further stabilization of economic activity.
According to the report, while labor markets remained weak and retail sales were flat overall, the economic situation continued to show signs of stabilization in July and August led by a pickup in factory activity and improvement in residential real estate.
Dallas, Boston, Cleveland, Philadelphia, Richmond and San Francisco specifically noted gains. Other areas reported the economy was stable or showing signs of stabilization while St. Louis remarked that the pace of decline appeared to be moderating.
“Most districts noted that the outlook for economic activity among their business contacts remained cautiously positive,” the Fed’s Beige Book survey said.
On the manufacturing side the survey showed that the near-term outlook among manufacturers varied, but the majority of reports indicated that manufacturers were cautiously optimistic.
Residential real estate markets remained weak, but signs of improvement continued to be noted. Chicago, Richmond, Boston, and San Francisco observed an uptick in sales over the last six weeks, while sales in the Philadelphia District were described as steady. Meanwhile, the survey showed consumer spending remained soft in most Districts. Boston, Philadelphia, and Kansas City noted improvement in sales, but attributed the increase primarily to back-to-school purchases. The majority of Districts reported that the cash-for-clunkers program helped boost traffic and sales. Overall however, consumer sales were flat.
On the labor market front, conditions remained weak across all districts, but several also noted an uptick in temporary hiring and a decline in the pace of layoffs, the report said.