The U.S. Federal Reserve Bank released its latest Beige Book on Wednesday, January 11th. In it, U.S. central bank officials included in the survey indicated that U.S. economic conditions in their respective regions seemed to have improved somewhat in December of 2011 compared with conditions observed the previous month.
The Fed's Beige Book is released eight times per year several weeks ahead of the next Federal Open Market Committee (FOMC) meeting. This particular Beige Book report was put together by staff at the San Francisco Federal Reserve Bank for the January 24-25th FOMC meeting.
More formally entitled, Current Economic Conditions, the Beige Book report generally contains anecdotal evidence compiled from information supplied by staff at the twelve regional Federal Reserve banks about economic conditions in their district.
Financial and precious metals markets tend to focus on the Beige Book because FOMC members reportedly use this public document, along with its private and potentially more significant Green and Blue books, to influence their future interest rate decisions.
U.S. Economic Activity Improved in December
Specifically, the closely watched report noted that U.S. economic activity gained at a modest to moderate pace in December. This showed an improvement versus the November Beige Book that indicated slow economic growth in some Federal Reserve districts.
Furthermore, the report observed that U.S. retail sales over the key December holiday period had improved noticeably versus the previous year's sales data. In addition, car sales were reported as especially strong, and the demand for non-financial services remained buoyant.
Fed Sees Subdued Inflation
With respect to price and wage pressures that could result in rising inflation, the Fed's report characterized them as quite limited, despite relatively high commodity price levels. Also, real estate values remained depressed, but seemed to have stabilized, and bank lending increased.
The report noted that wages and other labor costs were largely stable due to relatively low hiring levels and a persistently high U.S. Unemployment Rate, although jobs data has shown a favorable trend in the United States since late 2009.
Latest Jobs Report Shows U.S. Employment Picture Gradually Improving.
In its most recent Employment Report, the U.S. Unemployment Rate for December was reported by the U.S. Bureau of Labor Statistics on January 6th at the 8.5% level. This result showed a welcome improvement from the 8.7% number seen for the previous month.
In addition, U.S. Non-Farm Payrolls for December showed an impressive rise of 200K that was considerably better than market analysts' consensus of 150K. Nevertheless, the previous month's 120K result was revised lower to 100K.
The percent of U.S. workers actively seeking employment peaked at 10.2% in November of 2009 and has since gradually declined. Nevertheless, the headline employment number remains on the high side since its lowest level since the new millennium began was seen in late 2000 when it fell to a mere 3.9%.