Highlights
The Beige Book prepared by regional Fed banks for the upcoming September 18 FOMC meeting indicates that economic activity continues to expand but with various Fed Districts reporting growth of varying strength, such as "moderate," "modest," "continued to grow," and "slowed." While the Fed Districts reported tighter lending standards for residential mortgages, "credit quality remained good for most consumer and business borrowers. Outside of real estate, reports that the turmoil in financial markets had affected economic activity during the survey period were limited."

The consumer sector is holding up reasonably well, with retail sales "generally positive," but several Districts described motor vehicle and furniture sales as slow. Manufacturing is seen as continuing to expand outside of housing-related and auto industries. Employment gains continue and wage increases are "moderate or steady."

Even though wage increases are not accelerating, most Fed Districts see labor markets as tight. New York, Richmond, Atlanta, Minneapolis, and Dallas described their labor markets as tight. "Nine of the twelve Districts reported that there were shortages of some skilled workers, including those in the information technology, accountancy, legal, and health care professions. In addition, Kansas City noted shortages for workers with lower skills, such as housekeepers and waiters, while San Francisco reported that agricultural workers were in increasingly short supply. Staffing services firms reported more demand for temporary workers in several Districts (Boston, Richmond, and Dallas), but less demand in Cleveland."

The Beige Book is more important than usual because Fed officials have stated that official government statistics have reporting lags and data prior to the early August credit crunch are somewhat suspect in terms of reflecting current economic conditions. Fed officials have indicated that they will place greater reliance on anecdotal information (such as the Beige Book) and more timely high frequency data (such as jobless claims).

The bottom line is that the Beige Book has not tipped the balance to either a "slam dunk" ease at the September 18 FOMC meeting or a certainty for no change. While housing has worsened, the Beige Book indicates that this sector has not dramatically affected other sectors. One should note that labor markets remain tight and that might still be a factor keeping policy on hold. Likely the Fed will be balancing a tight labor market against any developing impact of housing weakness on the consumer sector.

2007 Release Schedule

Released On: 1/17 3/7 4/25 6/13 7/25 9/5 10/17 11/28 Released For: Dec Feb Mar May Jun Aug Sep Oct