Explaining Southern California's economy

Latest report shows Fed failing at dual mandate

Karen Bleier

The Federal Reserve has released it most recent Beige Book, an analysis of economic activity across the nation.

The Federal Reserve has two main jobs: seek price stability in the economy; and engender conditions that lead to full employment, which it defines at something in the 5-6 percent unemployment range. The Fed has other roles, related to it position as the nation's central bank and its control over interest rates. But at its core, the Fed is supposed to keep inflation and unemployment low.

According to the latest Beige Book — national economics research that the Fed puts out eight times a year — the central bank has inflation under control but it isn't seeing unemployment decline significantly. Here's how the Beige Book summary starts out:

Reports from most of the twelve Federal Reserve Districts indicated that overall economic activity continued to expand at a modest to moderate pace in June and early July.

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Something weird is going on with the U.S. economy

Karen Bleier

The Federal Reserve in Washington, D.C.

Hot on the heels of a very disappointing March jobs reports, we get a somewhat upbeat snapshot of the total economy from the Federal Reserve. The Fed's most recent "Beige Book" says the following:

Reports from the twelve Federal Reserve Districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March. Activity in the Boston, Atlanta, Chicago, Dallas, and San Francisco Districts grew at a moderate pace, while Cleveland and St. Louis cited modest growth. New York reported that economic growth picked up somewhat. Philadelphia and Richmond cited improving business conditions. The economy in Minneapolis grew at a solid pace and Kansas City's economy expanded at a faster pace.

And:

Hiring was steady or showed a modest increase across many Districts. Difficulty finding qualified workers, especially for high-skilled positions, was frequently reported. Upward pressure on wages was constrained. Overall price inflation was modest. However, contacts in many Districts commented on rising transportation costs due to higher fuel prices.

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February jobs report: Better than January?

A jobs sign hangs above the entrance to

KAREN BLEIER/AFP/Getty Images

A jobs sign hangs above the entrance to the US Chamber of Commerce building in Washington, DC.

The Bureau of Labor Statistics (BLS) will release its February jobs report on Friday. The January report was better than expected, with the country adding 243,000 jobs and the unemployment rate falling to 8.3 percent. The big question for February is, "Will the improving trend continue?"

Chances are good. The ADP report — which hasn't been all that reliable a predictor of the BLS data of late — came out today and said that the economy had added 216,000 new jobs, barely beating the Bloomberg consensus, which expects a nearly identical 215,000. 

Meanwhile, Business Insider engaged in a very elaborate piece of analysis and came up with — wait for it — 285,000! That would be, as BI notes, the best monthly jobs report in six years. I like that BI zeroes in on auto sales as a key predictor. February saw sales rise to a 15-million annual pace, more than two million better than 2011. 

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Bullet Points: The Federal Reserve's latest Beige Book

Mercer 11751

AP Photo / J. Scott Applewhite

The Federal Reserve Building in Washington, DC.

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.

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