The Beige Book is a Federal Reserve Bank report that is actually titled, Summary of Commentary on Current Economic Conditions by Federal Reserve District.  The report is published eight times per year.  The report is a compilation of data from each Federal Reserve Bank that gathered information on current economic conditions in each Federal Reserve District.  An overall summary of the twelve districts is prepared and described in the report. The report technically consists of information or observations that are not scientific or quantified with any considerable level of detail.  The report is based on market experts, business leaders, bank reports and other sources.  The Federal Reserve notes that these reports are not commentaries on the views of Federal Reserve officials.

This particular release was prepared at the Federal Reserve Bank of Minneapolis and based on information collected before November 24, 2008.

The summary of the Beige Book was that overall economic activity weakened across all Federal Reserve Districts.  The report showed that by and large that all districts had decreases in retail sales.   The report added that vehicle sales were down significantly in most Districts as well.  Contractions were expressed in the service sector, manufacturing activity, and tourism spending.  The report characterized housing as, “nearly all Districts reported weak housing markets characterized by reduced selling prices and low, but stable, sales activity.”   Commercial real estate markets also indicated declines in most areas.  Credit and lending conditions remained soft with reductions in residential, commercial and industrial lending standards tightening.  The mining and energy industries were depicted as softening laying the cause on lower output prices.  The summary on overall activity finished with an indifferent conclusion on agriculture stating that agricultural conditions were mixed with a relatively good harvest but concerns about profitability. 

The report mentioned that “Activity in the services sector generally contracted in most Districts since the last report.  All 12 Districts reported weaker manufacturing conditions, to varying extents.”  On the whole, a fairly bleak summary with contractions across the board in manufacturing and services.

The report also described labor market conditions as weakening.  The report stated, “Wage pressures were largely subdued. District reports characterized price pressures as easing in light of some decreases in retail prices and declines in input prices, particularly energy, fuel, and many raw materials and food products.” The report added that “A number of District reports mentioned that retailers were widely discounting prices in anticipation of a slow holiday sales season…and…signs of labor market slowing were evident in several District reports”

Business preparations for a contraction in sales seemed in place and may help avoid abrupt future losses.  The report showed that the discount stores did well in sales and that inventory levels overall were relatively stable, as most stores had projected the recent slowdown in sales.  The report ended with this comment in the category of spending and tourism, “district reports indicated that retailers were preparing for a relatively slow holiday sales season.”

With regards to credit, banking and finance the report concluded that credit standards had risen throughout the regions.   The real estate sector continued to show an increase in loan delinquencies and defaults. The report added commentary on commercial activity with this comment “despite reductions in construction materials costs, commercial building activity declined in many Districts with tighter credit conditions as a factor”.  Commercial real estate markets had weakened in general.

The report clearly shows that economic activity across the board had weakened further which will only way the markets down further combined with all the other distressing financial news.

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