Latest Fed Report Won't Alter Course to Monetary Expansion

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The most poorly titled economic report in the history of the world -- the Federal Reserve's "Beige Book" -- was released today. Despite its incredibly boring-sounding name, the data is actually pretty important, as it summarizes how various sectors of the economy are faring in major metropolitan areas. In this case, it looks like the very slow recovery trudges on, which means that the Fed probably won't find anything in the report that throws it off its course to loosen monetary policy in its next meeting.

Here are the highly summarized results of the Fed's Beige Book results from September to October, in Zagat-style format:

  • Manufacturing "continued to expand" in all Fed "Districts" but two, though hiring "remained sluggish."
  • Nonfinancial services "activity was stable to modestly increasing," and information technology, in particular, "remained solid."
  • In "most Districts," retail spending was "flat to positive." New vehicle sales "held steady or rose," and there was "continued improvement" in tourism.
  • The housing market "remained weak," however. "Overall home sales" were struggling, though a "few Districts" reported "some improvement."
  • Lending was "stable at low levels," though "demand picked up slightly" in some Districts, but "commercial and industrial" loan demand "remained weak."
  • Farming was "mostly favorable," and the energy sector "continued to expand." 
  • Input costs "rose slightly," while the prices of final goods "were stable." There was "little evidence" of wages rising, and "hiring remained limited" due to "economic softness."

In short, there's still a recovery underway, it's just really, really slow. This is the narrative that Fed economists have heard several times since last spring. So if they were planning to engage in a new quantitative easing program before, then they probably still are now. And that's certainly the feeling we get from listening to what Fed officials, like Chairman Ben Bernanke, have been saying.

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Daniel Indiviglio was an associate editor at The Atlantic from 2009 through 2011. He is now the Washington, D.C.-based columnist for Reuters Breakingviews. He is also a 2011 Robert Novak Journalism Fellow through the Phillips Foundation. More

Indiviglio has also written for Forbes. Prior to becoming a journalist, he spent several years working as an investment banker and a consultant.
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