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Fed’s ‘Beige Book’ Sees Signs of Economic Improvement

September 10, 2009

Economic activity continued to stabilize in July and August despite labor markets remaining weak and retail sales being flat, according to the Federal Reserve’s Beige Book survey.

Dallas, Boston, Cleveland, Philadelphia, Richmond and San Francisco noted that economic activity had firmed or improved. Atlanta, Chicago, Kansas City, Minneapolis, and New York described economic activity as stable or showing signs of stabilization, while St. Louis reported that the economic decline appeared to be moderating.

“Most districts noted that outlook for economic activity among their business contacts remained cautiously optimistic,” noted the report, which was based on information collected from businesses and other contacts outside the Fed Reserve before Aug. 31.

The majority of districts reported flat retail sales. Richmond, Philadelphia, Chicago, Atlanta, and Boston noted that retailers continued to carefully manage inventories, keeping them in line with low sales levels.

Additionally, a majority of districts confirmed that the Cash for Clunkers program boosted traffic and sales. Richmond, Atlanta, Chicago and Minneapolis also noted increases or planned increases in automobile-related production.

The report also noted that most regions reported some improvement in residential real-estate markets.

Loan demand was described as weak, as many districts reported that credit standards remained tight. “New York, Philadelphia, Cleveland, Richmond, Kansas City, St. Louis, and San Francisco observed further weakening in loan demand across most categories,” read the report. “Dallas noted scattered reports of improvements in loan demand. Contacts in Cleveland, Chicago, and Dallas noted an increase in demand for auto loans. Credit standards ranged from unchanged to tighter in most districts. However, Chicago reported that credit conditions and availability had improved.”

Labor markets also remained weak across all districts. However, staffing firms in Atlanta, Dallas, Richmond, Cleveland, Philadelphia, Boston, New York, and Chicago did report a slight pickup in the demand for temporary workers.

Wage pressures remained minimal across all districts. Consumer prices were described as being steady in most districts, although Kansas City and San Francisco noted some downward pressure on retail prices.

To view the entire report, click here: http://www.federalreserve.gov/fomc/beigebook/2009/20090909/FullReport.htm.

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