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ECON: Beige Book Shows Fiscal Cliff On The Radar
Posted to: Micro News
Wednesday, November 28, 2012 2:34 PM
The Fed's Beige Book typically isn't that interesting, merely serving to recap anecdotes from the Fed's business and industry contacts. Today's really isn't much of an exception and markets aren't doing much with it, but there's perhaps been a bit of a benefit for bond markets and a hit for stocks, though the correlation is microscopic at best.
More interesting than the market's reaction (or lack thereof) is simply the growing body of evidence suggesting that business are concerned about the Fiscal Cliff. While it's somewhat notable that 7 out of 12 regions reported weaker factory activity, 5 of those chalked the weakness up, in part, to the Fiscal Cliff.
As expected, the Book reported some weakness in the New York district due to Hurricane Sandy, but overall, economic activity continued to expand at "a measured pace." Respondents noted that the market for single family homes continued to improve except for the Boston and Philadelphia districts. Keep in mind that the Federal Reserve "districts" aren't limited to the metropolitan area in question. This can account for discrepancies in the apparent health of your local housing market and the Beige Book's anecdotes. The Boston district, for example, is comprised of CT, MA, RI, VT, NH, and ME.
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