Reserve Districts Report Modest Activity
WASHINGTON (9/8/11) Economic activity continued to expand at a modest pace, although some districts reported mixed or weakening activity, according to the Fed's Beige Book. The Beige Book is a survey of reports from the 12 Federal Reserve Districts on the conditions in their districts. The report was based on anecdotes of conditions occurring from the latter half of July to August 27.
Five of the Fed's districts -- San Francisco, Dallas, Kansas City, Minneapolis and St. Louis -- reported "modest or slight" expansion. The rest said growth was either sluggish, or reported mixed results. Richmond and Philadelphia reported slower economic activity overall, said the report.
Contributing to the sluggish economy:
• areas weakened by a slowdown in manufacturing activity,
• continued weakness in real estate,
• Hurricane Irene's impact on the East Coast,
• and volatility in the stock market with "increased economic uncertainty".
Consumer spending rose slightly in most districts, largely due to auto sales and fewer problems in the supply chain from Japan. Pressures on prices eased in some industries, the report said.
Loan demand remained stable or slightly weaker, with only the St. Louis district reporting a modest increase. Most districts reported that loan quality "was generally improving and that the credit standards were largely unchanged." However, New York indicated that delinquency rates increased on most categories of loans, and that banks tightened standards for commercial mortgages and commercial and industrial loans.
According to The Wall Street Journal
, the report will be used at the September 20-21 meeting of the Federal Open Market Committee (FOMC) -- the Fed's policy-making group that determines interest rates. Although officials are divided, most appear to favor using an additional monetary stimulus to try and spur growth, the article said.