fed beige book

Beige Book Shows Broad Weakness

By MAYA JACKSON RANDALL

WASHINGTON -- A Federal Reserve report Wednesday shows that economic activity across the nation has weakened even further, adding to this week's string of dismal financial news.

Since the Fed released its last beige book in mid-October, economic activity has softened further across all 12 of the nation's Federal Reserve districts, which include major cities such as New York, Cleveland, Richmond, Atlanta and Chicago, the latest report shows.

"Districts generally reported decreases in retail sales, and vehicle sales were down significantly in most Districts," said the beige book, which is based on information collected before Nov. 24.

The report also noted that tourism spending "was subdued" in a number of districts and reports on the service sector "were generally negative." Additionally, the report found that manufacturing activity has declined in most districts.

The picture the report paints of the housing market was also rather bleak. Nearly all districts reported weak housing markets, adding that selling prices have taken a beating and sales activity is slow, but at least, stable.

Meanwhile, the report finds that commercial real estate markets generally declined in most districts and lending standards have tightened.

While the last beige book, released on Oct. 15, highlighted the energy and mining sectors as "positive," it appears that that bright spot has now dimmed. The new December report points out that mining and energy production and exploration have started to soften in light of lower prices.

Districts also reported weak conditions in the labor markets and said pressures on prices have eased. The Boston, Richmond, Chicago and Dallas districts all reported that demand for temporary staff decreased. Also, several businesses in the Atlanta District reported that layoffs accelerated and hours declined. Dallas officials said the labor market weakness was most pronounced in the manufacturing sector. At the same time, various areas said demand for so-called skilled labor was still strong.

The report, a sneak peek into local conditions, is based on information collected during October and November, when the economy continued to waffle under the weight of the country's worst financial crisis in decades. So it reflects how the housing market tumble and related credit crunch are continuing to weigh on local economies throughout the country.

Whereas the October beige book indicated that the downturn had broadened to all 12 districts, Wednesday's report shows that the slump has intensified.

Fed officials will review the anecdotal information at their policy meeting on interest rates next week.

Federal Reserve Chairman Ben Bernanke has already made clear that the central bank stands ready to do all it can to prop up financial markets and the economy. In a speech earlier this week, Mr. Bernanke said further interest rate cuts are "certainly feasible" and added that the Fed could also launch new liquidity programs to try to revive markets.