The Federal Reserve Bank FOMC will consider interest
rates actions as the focus returns to the US economy. The FOMC left interest rates unchanged in their last meeting.
RECENT
ECONOMIC DATA RELEASES (from newer to older data):
N/A.
BEIGE BOOK (12 DISTRICTS)
REPORT OF SEPTEMBER 11TH. 2002
The
current Beige Book data was significantly
the same from the last one.
The US economic recovery is
still very sluggish.
There
was little employment gains seen in July and
August.
Consumer
spending was mixed.
Drought
conditions continue to affect agriculture.
Construction
and residential home sales continue to be
strong.
The
First District (Boston) reported that the economy is moving sideways,
on net, with some sectors level to down and
others up modestly. Manufacturers report flat
revenues; retailers and tourism contacts say
business is slow.
The Second district (New York) reported that the
economy has remained sluggish since the last report,
except in the housing sector, which continued to
show strength. Prices of goods and services
generally remain stable. Hiring remains
lethargic, though some signs of a pickup were
noted in late August. Retail sales were on or
below plan in August, though some improvement
was noted in the second half of the month. Most
retailers describe inventory levels as favorable
and report somewhat less discounting than a year
ago.
Third district (Philadelphia) reported that business
that have been building since the beginning of
the year appeared to ease in August.
Manufacturers reported steady shipments and
orders after several months of growth. Retail
sales of general merchandise moved down from
July to August, although there were scanty
year-over-year gains in both months. Auto sales
have been steady. Tourism activity fell in July
and August after a strong June. Bank loan
volumes have edged down, as gains in residential
mortgages have been offset by declines in other
types of loans. Commercial real estate markets
continued to ease. Home sales have slipped since
spring, although they continue at a fairly
strong pace.
Fourth district (Cleveland) reported that the
economic activity showed mixed signals during
July and August. Homebuilding activity remained
strong; shipping activity continued to increase;
automobile and affiliated manufacturers reported
positive conditions, as did home goods
manufacturers; and, with one exception, contacts
that previously reported they were planning to
increase their capital expenditures indicated
those plans were still on track.
The Mid-Atlantic Fifth District (Richmond) reported that
there were only scattered signs of economic
growth in July and August. Manufacturing
activity was essentially flat; shipments edged
lower and new orders were unchanged. Services
firms' revenues also were flat, and retail sales
growth strengthened in some areas but was
sluggish in others. Residential mortgage lending
rose as mortgage interest rates continued to
trend down, while commercial lending remained
weak. District home sales were strong, but with
the exception of some pickup in retail leasing,
commercial real estate activity was little
changed. Price inflation remained modest
throughout the District's economy. In
agriculture, recent rainfall helped crops, but
prolonged hot and dry weather during much of the
summer reduced corn and soybean yield prospects
and distressed pastures.
Southeastern Sixth District (Atlanta) reported that economic
activity improved modestly in July and August, whereas assessments of
future prospects were mixed. Retail sales
increased, led by autos and positive
back-to-school sales. Housing markets remained
strong overall, while commercial real estate
markets continued to stabilize. Manufacturing
output improved slightly. Contacts reported that
leisure travel had returned to healthier levels,
but business travel in the region remained weak.
Labor market conditions were largely unchanged,
while price pressures remained limited to a few
areas.
The Seventh (Chicago) reported that its
economy remained sluggish and there was uneven
expansion. Consumer spending remained sluggish
in the District. The residential housing market
continued to be strong, while softness persisted
in nonresidential construction and real estate
markets. Manufacturing conditions varied widely
across industries. Overall lending activity
increased modestly, as strong household loan
demand outweighed soft commercial loan demand.
Reports on labor market conditions continued to
be mixed. Crop conditions in the Midwest have
been highly variable throughout the current
growing season, but on average remain
substantially less positive than a year ago.
Price pressures remained subdued at the retail
level and there were no significant reports of
upward wage pressures.
The Eighth district (St Louis)
reported that the overall economic recovery continues at a slow pace.
Contacts in manufacturing report few new hires,
although some firms plan to expand in or
relocate to the District. Some contacts report
that they are restructuring with few or no
layoffs. The services sector shows moderate
growth, with increased activity, particularly in
tourism. Retail and auto sales in July and
August increased slightly over 2001 levels.
Sales of new homes have increased in several
District locations, but conditions in commercial
real estate markets are mixed. In the last three
months, demand for commercial and industrial
loans has declined, while demand for residential
mortgages, consumer loans, and credit cards has
remained mostly unchanged. In the agricultural
sector, estimates of crop yields for the
upcoming harvest are expected to be below
year-ago levels throughout most of the District.
The Ninth District (Minneapolis) reported
that its economy economy appears to have grown very little from
mid-July through August. Agriculture,
residential construction and tourism grew.
Output was flat, however, in the energy and
mining sectors, consumer spending was level, and
commercial construction and manufacturing
contracted. Over this period, labor markets were
mixed, while wages and prices were stable.
Significant price increases were noted in
insurance and housing.
Tenth District (Kansas
City) reported that its economy economy showed some signs of
moderating in late July and August, although
business contacts remained generally optimistic
about future economic activity. Consumer
spending was not quite as strong as earlier in
the year, the recovery in manufacturing appeared
to lose some momentum, and some commercial real
estate markets weakened further. On the positive
side, residential construction remained solid,
and energy activity held on to previous gains.
In the farm economy, corn and soybean crops were
in bad condition due to the drought. As in
previous surveys, wage and retail price
pressures were virtually nonexistent, while
prices for some manufacturing materials
continued to increase.
The Eleventh District (Dallas)
reported that its economic growth appears to have stalled in late July
and August. While some sectors, such as
high-tech manufacturing and business services,
continued to show signs of recovery, other
areas, such as construction and
construction-related manufacturing, appeared to
contract. While most respondents expect the
economy to continue to slowly recover, many
contacts expressed concern that the recovery is
very fragile and that war with Iraq or another
major terrorist event could lead to declines in
activity. Manufacturing activity was flat or
slightly down, and retail sales growth weakened
slightly. Construction and real estate activity
softened further. Energy activity was flat.
There was also little change in financial
conditions. Demand for business services
continued to show signs of slowly improving,
although the airline industry continues to
suffer. Rain helped crop and pasture conditions,
but drought remains a serious problem in some
areas.
The Twelfth
District (San Francisco) reported modest economic growth in late July
and August, with substantial variation in
conditions across and within sectors. Wage and
price increases were limited. Respondents noted
solid consumer demand for automobiles and other
big-ticket items, but sales of other retail
trade and service items generally were flat to
down. Orders and sales of most high-tech and
other manufacturing products were sluggish, with
excess capacity still a concern. In agricultural
markets, despite solid overall conditions, some
producers struggled with adverse supply factors,
while energy markets saw stable supply. Demand
for commercial real estate was weak, with rents
falling further in some markets, but residential
demand remained solid. Financial institutions
saw weak demand for business loans, and they
tightened credit standards for riskier business
loan applicants.
HUMPHREY-HAWKINS (CONGRESSIONAL
TESTIMONY) REPORT OF JULY 16th. and 17th. 2002.
Chairman
Greenspan told the House of Representative
Budget Committee that the US economy is
resilient, but "the depressing effects will
linger". Chairman Greenspan also warned of
increasing budget deficits.
Chairman
Greenspan was optimistic that the business
investments in the 1990s are still bearing
productivity fruits.
He
doesn't see a "bubble" in the booming
housing market.
US
economy to grow between 3.50% to 3.75% this year
with little inflation.
Chairman
Greenspan also expects corporations to restate
their financial numbers lower.
