The U.S. economy weakened further nationwide during the previous six weeks, according to the Beige Book. Central themes in the detailed report released by the Federal Reserve included no stabilization in housing prices and staggering weakness in the U.S. manufacturing sector.
Ten out 12 districts reported deterioration in economic activity, with only the Philadelphia and Chicago Federal banks saying conditions "remained weak." The survey was based on data taken before February 23.
Various contacts across the country saw no potential for an economic recovery before the end of 2009 or indeed early 2010.
The most widespread weakness was reported in residential real estate. The Beige Book summary said there was only "minimal and scattered signs of stabilization emerging." Indeed there was a slight indication of stability in the Cleveland, Richmond, Dallas and San Francisco Feds' regions. They reported a rising or better-than-expected sales pace for homes in some areas.
The U.S. manufacturing sector did no better in the month. Steep declines were reported across the nation in many sectors, particularly construction-related and capital goods industries. Most regions saw "pronounced declines." Indeed, the Cleveland area reported a 25% annualized decline in manufacturing activity.
The only bright spot was in the pharmaceutical and food production sectors, and then only in some regions.
According to the Beige Book, consumers appear to be spending more in January and February compared to the terrible holidays shopping season, but overall consumption remains "sluggish," the report concluded.
All districts reported a climb in unemployment, with layoffs and hiring freezes on the rise.
Almost all districts also reported fewer business loan requests, and overall tighter credit conditions. Only the Philadelphia region reported more demand for business and commercial loans.
In the last Beige Book, released Jan. 14, economic conditions had weakened in nearly all 12 districts and consumer spending had slowed significantly over the holiday shopping period.
The Beige Book is the central bank's summary of economic news over roughly the past six weeks from the 12 Federal Reserve Bank districts. The Fed's monetary policy committee looks to the compilation of comments by regional Fed banks to get a non-numerical picture of economic conditions across the country.
By Megan Ainscow and edited by Nick Say
©CEP News Ltd. 2009