Fed’s Beige Book Offers Mixed Signals on U.S. Economy

The Federal Reserve’s latest Beige Book, a recap of economic activity across the United States, painted a mixed picture for the world’s largest economy.

On the positive side, the Fed noted that “economic activity has expanded since the previous Beige Book report, with all twelve Districts characterizing the pace of growth as either modest or moderate.”

Alternatively, the Fed cited uncertainty over the fiscal cliff situation as a key factor that negatively impacted consumer spending and job growth.  The Beige Book also noted that “hiring plans were more cautious for firms doing business in Europe or in the defense sector.”

As for the financial markets, they largely showed minimal response to the Beige Book’s release.  Gold futures remained near unchanged at $1,683.90 per ounce, while silver futures held near the flatline at $31.52 per ounce.  In the equity markets, the Philadelphia Gold & Silver Index remained modestly lower, by 0.6%, at 162.50, while the S&P 500 Index inched up by 0.1% to 1,473.82.

Other highlights from the Beige Book included the following:

- Since the previous Beige Book, activity in the New York and Philadelphia Districts rebounded from the immediate impacts of Hurricane Sandy. Growth in the Boston, Richmond, and Atlanta Districts appears to have increased slightly, while the St. Louis District reports some slowing.

- Citing concerns that consumers will spend cautiously due to ongoing fiscal uncertainty, retail contacts and auto dealers reported a slightly dimmer, though positive, outlook for future sales.

- Existing residential real estate activity expanded in all Districts that reported; growth rates were described as moderate or strong in nine Districts.

- Though a little weaker than residential real estate, reports on sales and leasing of nonresidential real estate are still mostly positive–described as modest on average.

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