The Breakdown

Explaining Southern California's economy

Bullet Points: The Federal Reserve's latest Beige Book

The Federal Reserve Building in Washington, DC.
The Federal Reserve Building in Washington, DC. AP Photo / J. Scott Applewhite

The Federal Reserve publishes its so-called "Beige Book," a snapshot of the economy taken through the lens of the Fed's district banks, eight times per year. It is booor-ing. You may not even want to read the executive summary of the latest version. Luckily, you don't have to, because I've broken it down into bullet points. And I've assigned my own grades, on how the various parts of the struggling economy are doing. (The Fed, needless to say, doesn't hand out grades.)

•The Big Picture

"...overall economic activity continued to expand in September, although many Districts described the pace of growth as 'modest' or 'slight' and contacts generally noted weaker or less certain outlooks for business conditions."

Translation: Stuckflation, an economy going nowhere, for the rest of the year.

C-

•Consumer Spending and Tourism
"Consumer spending was up slightly in September....Tourism was generally higher in those Districts reporting on the sector."

Translation: Americans are buying cars and going to Broadway shows. Vroom! Clap-clap-clap!

B+

•Business Spending
"...a weaker and more uncertain economic outlook had increased caution and was weighing on future spending plans."

Translation: Businesspeople are chickens. And with good reason. They might have more to fear than fear itself.

D

•Nonfinancial Services
"On the positive side, contacts in St. Louis reported that demand for business support services increased, and Boston reported strong business conditions for economic consulting firms involved with litigation work and advertising firms helping to market financial services."

Translation: A mixed bag for white-collar professionals who aren't bankers.

B

•Manufacturing and Transportation

"...manufacturing and transportation activity increased since the last report in most Districts. A large number of Districts reported higher production of autos and other transportation-related equipment. Cleveland, Atlanta, and Chicago noted increases in auto production, and Boston, Richmond, Chicago, and St. Louis all cited robust activity for auto suppliers. Dallas reported healthy demand for nondefense transportation goods. Boston, Richmond, Kansas City, and San Francisco indicated continued growth in commercial aviation and aerospace manufacturing. Steel production rose in Cleveland and Chicago, and in a number of Districts metal manufacturers' new orders also rose."

Translation: For a country that isn't supposed to be making stuff anymore, our manufacturing sector seems to be the only real bright spot.

A

•Real Estate and Construction
"All twelve Districts reported that real estate and construction activity was little changed on balance from the prior report. Residential construction remained at low levels, particularly for single-family homes....Commercial real estate conditions remained weak overall...."

Translation: No surprises. Real estate sucks.

F

•Banking and Finance
"Financial activity was reported to have weakened some since the last report. Dallas noted that the improvement in financial conditions had stalled, and Chicago indicated a further tightening of credit conditions, particularly for financial firms."

Translation: Once again, why did we bail out the banks?

C-

•Agriculture and Natural Resources
"...crop conditions at harvest were less favorable than a year ago, although results varied by and within Districts....Activity in energy-producing sectors strengthened in the Cleveland, Minneapolis, Kansas City, Dallas, and San Francisco Districts."

Translation: Farms are doing OK, the energy economy is poised for a boom. Is this feeling like 1954 yet?

A-

•Employment, Wages, and Prices
"Cleveland, Richmond, Atlanta, Chicago, and Kansas City all noted that firms in some sectors that were hiring more broadly (such as manufacturing, transportation, and energy) were also experiencing difficulties in finding appropriately skilled or qualified labor....Most Districts reported that wage pressures remained subdued."

Translation: Unemployment will probably begin edging down. But no one is making any money. We are nation of broke, jobless people.

C


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