Beige Book (Again) Finds Modest Growth; Few Changes Outside of Sandy


The Federal Reserve’s periodical roundup of economic activity in its 12 regions sang a familiar song about conditions over the last six or so weeks: that there is modest to moderate growth, but little that can be considered exceptional, let alone exciting. Perhaps the only notable exception is the bounce-back, primarily in the Philadelphia and New York regions, following Hurricane/“Super Storm” Sandy.

The Beige Book said noticably improved growth was apparent in Sandy-affected as well as regions including Boston, Richmond and Atlanta; though some deterioration existed in St. Louis. Still, it appears better results were expect for the period that included the peak of 2012 holiday season shopping even though sales were “modestly higher” than the previous year. Sales categories were bolstered somewhat, yet again, by steady or stronger auto sales in 10 Fed districts.

In the ever-important manufacturing category, conditions were mixed. It was about an even split between districts growing in manufacturing and a combination of those contracting or remaining mostly unchanged. Boston (bolstered by industries including aerospace and chemicals) and Chicago (auto) appeared to be doing best among the expanding regions. Also, more than half of the regions are optimistic about growth prospects for the rest of 2013, with Philadelphia and Atlanta having a particular surge in confidence.

Long downtrodden residential real estate contacts reported to the Fed of expansion, albeit from low levels, in all regions thanks in no small part to historically low interest rates and home prices. Commercial real estate also was strong, though not as much as residential.

Few regions – New York, Atlanta, Chicago, Dallas – reported a noticeable increase in loan demand in recent weeks. Several, mostly northern districts, reported improvements in asset quality, said Beige Book. There has also, finally, been some loosening in long-high credit standards, according to contacts.

As was the case in much of 2012, agriculture reports to the Fed were mixed, largely on inconsistent and unhelpful weather patterns. Ongoing drought conditions hurt in regions such as Kansas City and Dallas. However, such conditions ceded a bit in parts of Richmond and Atlanta.

Meanwhile, Beige Book noted input prices appeared to hold steady, overall, in the waning days of 2012 into 2013. There were, however, some food and constructing-material costs that rose in a few districts.

-Brian Shappell, CBA, NACM staff writer

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