Fed Survey Shows Weak Economy StabilizingThe Federal Reserve released its Beige Book on Wednesday, and it shows that some of the 12 districts have recorded activity that shows signs of stabilizing, but the labor market remains weak.
The report shows that overall U.S. overall economic activity continued to contract or remains weak. Five of the 12 districts saw a moderation in the speed of decline in economic activity.
Manufacturing activity weakened across a broad range of industries in most districts, with only a few exceptions, says anecdotal reports from the Fed's Beige Book's 12 regional banks. The survey is based on records collected by the Federal Reserve Bank of Dallas.
The Federal Reserve cut interest rates to almost zero earlier this year to beat back a severe recession sparked by the collapse of the housing market. The Fed's Chairman Ben Bernanke stated earlier in the week he saw tentative signs the economic decline was slowing. The survey, despite the bits of positive news, has a dismal picture of the country's economy that is burdened with a prolonged recession and unemployment at 8.5 percent.
The labor markets were noted to be weak because of the millions of layoffs, temporary shutdowns and widespread hiring freezes. With the economy at a standstill, districts report prices are moving downward, including significant discounting among retailers and other services offering fee cuts.
Consumer spending remains soft, yet some districts said sales were up compared to depressed levels in the previous reporting period. Big ticket and luxury item purchases declined, as consumers focused their spending on food and necessary household items.