The Fed came out with its Beige Book today, a summary of economic activity for June to mid-July in all of its twelve districts. The report overall noted “modest” growth if not slowing growth. According to their report:
Economic activity has continued to increase, on balance, since the previous survey, although the Cleveland and Kansas City Districts reported that the level of economic activity generally held steady. Among those Districts reporting improvements in economic activity, a number of them noted that the increases were modest, and two Districts, Atlanta and Chicago, said that the pace of economic activity had slowed recently.
Of note in their report:
Commercial and industrial real estate markets continued to struggle in all twelve Districts. Overall, vacancy rates were flat to slightly increased and continued to exert downward pressure on rents.
Nearly all Districts reported sluggish housing markets in the months since the homebuyer tax credit expired on April 30.
Reports on retail sales during the early summer months were generally positive, although in most Districts the increases were modest.
Manufacturing activity in most Districts continued to move up since the last report, although the pace of activity slowed or activity leveled off in the New York, Cleveland, Kansas City, Chicago, Atlanta, and Richmond Districts.
Reports on banking conditions were largely mixed across the Districts.
Most Districts reporting on credit standards continued to note that lending standards remain restrictive.
The Fed doesn’t like to sound too negative in its reports, and it won’t indicate a slowing until we are well into it. I have reported that a slowing economy is a trend. Chairman Bernanke said last week:
[That] there was “unusual uncertainty” over the economy’s outlook. He told Congress the Fed, which has already slashed interest rates close to zero, was ready to take further measures to support the economy if necessary. …
The U.S. economy shed jobs in June for the first time this year and the unemployment rate remained high, adding to concerns that the pace of the recovery could slow in the second half.
Also today, the report on durable goods orders came out:
The manufacturing sector sputtered in June, according to new durables orders. New factory orders for durable goods in June fell 1.0 percent, following a 0.8 percent drop the month before. The June numbers fell well short of market expectations for a 1.0 percent boost. The June decline was led by the transportation component. Excluding transportation, new durables orders slipped 0.6 percent, following a 1.2 percent gain in June.
Durable goods are an indicator of future business spending.
On Wednesday a consumer confidence report from the Conference Board was quite negative:
Consumer confidence dipped in July-again over worries about the jobs picture and over income prospects. The overall consumer confidence index slipped to 50.4 in July from an upwardly revised 54.3 in June (initially 52.9). Analysts projected July to print at 51.0. The latest decrease was led by a drop in expectations to 66.6 from 72.7 in June. But the present situation sub-index also declined-to 26.1 from 26.8.