- The Washington Times - Wednesday, July 29, 2009

Economic activity continued to be weak going into the summer, although the pace of decline has moderated and activity has begun to stabilize at a low level, the Federal Reserve reported Wednesday in its latest Beige Book assessment of the economy.

Labor markets in all 12 Fed districts remain slack, the Fed said, as employment continues to decline. The weakness of labor markets has virtually eliminated upward wage pressure, and wages and compensation were steady or falling in most districts.

The current unemployment rate is 9.5 percent, and the Fed’s latest forecast calls for it to hover around 10 percent later this year and remain at elevated levels throughout 2010 and 2011, Fed Chairman Ben S. Bernanke told Congress last week.

The Beige Book routinely is prepared in advance of the next Fed policy meeting, where decisions are made on short-term interest rates. The next meeting will occur Aug. 11 and 12. Wednesday’s report focused on economic activity before July 20.

Most of the Fed’s 12 districts reported sluggish retail activity, the report said. Consumer spending in the early summer remained below previous-year levels in most districts.

Many districts said manufacturing activity remained depressed but with selected signs of modest improvement. The report said the Fed expects a modest and uneven recovery in manufacturing during the next six to 12 months.

All 12 Fed districts described commercial real-estate leasing markets as weak or slow. Residential real estate markets remained weak, but many reported signs of improvement.

In most reporting districts, overall lending was stable or weakened further for most loan categories. Banks continued to tighten lending standards in the New York, Philadelphia, Richmond, Chicago, Kansas City, Dallas and San Francisco districts, while Cleveland and Atlanta reported that higher standards remained in place.

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