The “Beige Book,” the Fed’s compilation of anecdotal reports about business conditions in 12 metro areas, came out Wednesday. As expected, reports suggest the pace of economic activity slowed somewhat since the last report.
Here are excerpts:
Consumer spending was reported as mixed, weak or slowing in nearly all areas, although tax rebate checks boosted sales for some items, especially electronics.
Sales at discount stores were growing in several areas, but sales at most other types of stores, especially for discretionary and housing-related items, were typically characterized as weak or falling. The outlook for retail activity was generally downbeat.
Car sales were almost uniformly weak. Sales were especially poor for large vehicles such as trucks, SUVs and some minivans. Demand for small fuel-efficient and foreign vehicles was reported to be solid or increasing in several cities.
Tourist activity was mixed: San Francisco said travel to Hawaii declined noticeably; Atlanta noted increased hotel cancellations and shorter trip durations; tourist activity to certain mountain areas was stronger, perhaps due to more residents vacationing close to home.
The demand for services was also mixed, with strength in the IT and health care industries offsetting some weakness in other sectors.
Production of housing-related goods, such as construction equipment, wood products, home furnishings and HVAC units, declined in many areas.
Manufacturers plan to raise selling prices as a result of higher input prices (fuel, metals, food, chemicals), with several commenting on fears of a corresponding decrease in customer demand and overall sales volume.
Residential real estate markets declined or were still weak across most of the country. Commercial real estate activity also slowed or remained sluggish in a majority of cities.
In banking, loan growth was generally reported to be restrained, with residential real estate lending and consumer lending showing more weakness than commercial lending.