US FED: Beige Book

U.S. Economic Analysis
14:41 US FED: Beige Book - Moderate, Modest and Mixed; Diffusion Up Boston, October 17. The latest edition of the Beige Book shows vigilance but a lack of evidence of spillovers from the housing collapse. Business contacts said economic activity decelerated since August but they did not say it declined. Nevertheless, businesses are cautious and uncertain about the economic outlook. The expansion was variously characterized as "moderate," "modest" and "mixed." In the summary, prepared by the Dallas Fed on information collected on or before October 5 (so it may or may not include reaction to the September jobs report), growth was said to be "similar to that observed in the last Beige Book in seven Districts -- Atlanta, Boston, Chicago, Minneapolis, New York, Philadelphia and St. Louis." The economy grew at a slower rate in five Districts -- Cleveland, Dallas, Kansas City, Richmond and San Francisco. This was a soft Beige Book but not as soft as the rapid credit market deterioration in July and August would have suggested two months later.
Key points:
* Services activity was generally neutral to positive.
* Uncertain outlook for retail sales; retailers reducing inventories
* Four districts indicated "solid growth" in factory activity
* Residential real estate and construction off further; commercial steady
* Continued downtrend in demand for residential mortgages; personal loans up
* Increased delinquencies and deteriorated credit quality
* Positive activity in energy and mining
* Labor markets remain tight; worker shortages in variety of occupations
* Moderate to steady wage advances; upward pressure on input costs We've tried to take an empirical approach to the Beige Book reports. Searching the full report, we isolate negative words such as weak, weaker, weakening, soft, softness, slowing, down and downward (among others). On the positive side, we count words like strong, strength, solid, up, upward, uptick, higher, etc. We diffuse the negatives and positives to come up with an index and what we came up with for the latest Beige Book (-0.4) is actually better than either the January 17 (-1.6) or the September 5 report (-5.8).