Economic growth is still grinding along, but has slowed considerably since earlier in the year, according to the Federal Reserve's popular ""Beige Book"":http://www.federalreserve.gov/fomc/beigebook/2010/20100908/default.htm report released Wednesday.[IMAGE]
The research firm ""IHS Global Insight"":http://www.ihsglobalinsight.com called the Beige Book assessment a Ã¢â‚¬Å“surprisingly frank description of current economic conditions.Ã¢â‚¬Â
Ã¢â‚¬Å“While this characterization of the economy is not a surprise, given the recent downward inflection of indicators on consumer and business spendingÃ¢â‚¬Â¦and the employment markets, the very frank description of the situation and the avoidance of the use of the typical Fed euphemisms suggests a great deal of concern about the direction of the economy,Ã¢â‚¬Â said Brian A. Bethune, IHSÃ¢â‚¬â„¢ chief U.S. economist.
Beige Book findings are released eight times a year and are based on anecdotal information collected across the country from businesses and contacts outside the Federal Reserve.
Reports from the 12 Fed districts painted a picture of ""widespread signs of a deceleration."" Economic growth at a ""modest pace"" was the most common characterization of overall conditions in the five western districts of St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco.
An equal number of districts Ã¢â‚¬" New York, Philadelphia, Richmond, Atlanta, and Chicago Ã¢â‚¬" all highlighted mixed conditions or deceleration in overall economic activity. Only Boston and Cleveland pointed to positive developments or net improvements compared to the statements they published in July.
Real estate remains a drag on economic growth in regions across the country, with major trouble spots identified in poor home sales and weak demand for commercial space.[COLUMN_BREAK]
According to the report, activity in residential real estate markets is continuing to decline. Most districts underscored evidence of very low or declining home sales, which many attributed to a sustained lull following the expiration of the homebuyer tax credit.
Some districts, such as New York and Dallas, noted that the expiration of the tax credit created especially weak conditions for lower-priced homes, while others, including Philadelphia and Kansas City, identified the high end of the market as the primary weak spot.
Cleveland, St. Louis, and Minneapolis were the exceptions to this pattern of declining activity, with reports from their contacts indicating that residential construction activity improved of late.
Inventories of available homes rose in general. Price movements were mixed, with most districts reporting stability or declines of late. A few, notably Boston, Minneapolis, and San Francisco, noted that prices rose in some areas compared with the previous reporting period or last year.
Richmond reported that recent home sales were ""dominated by foreclosure and short sales,"" and Chicago reported an increase in the supply of foreclosed homes for sale.
Demand for commercial, industrial, and retail space generally remained depressed. Vacancy rates stayed at elevated levels in most areas and rose further in a few districts, placing substantial downward pressure on rents. Asking rents continued to decline in parts of New York and Kansas City.
A few districts reported exceptions to weak conditions. Cleveland noted improved construction activity for industrial use and educational infrastructure, prompting modest hiring by builders. Chicago reported an increase in inquiries for commercial redevelopment and rising construction activity for public projects, but Richmond reported that state and local governments cut back on construction projects.
Reports from financial institutions pointed to generally stable or slightly lower loan demand and noted some modest improvements in credit quality.
Contacts in Philadelphia and Richmond emphasized households' ongoing efforts to reduce their debt burdens. A recent flurry of refinancing activity spurred increased demand for residential mortgages in New York, Cleveland, Chicago, and Kansas City, but new-purchase mortgage originations remained sluggish across the country.