Economic expansion was modest and growth was moderate in nine of the 12 Federal Reserve districts, the Beige Book reported today.
Richmond, Va., and Philadelphia reported slow growth and a decline in manufacturing. Boston turned in the most downbeat account, reporting a slowdown in several sectors, including IT and tech firms and staffing firms.
The report is compiled by the Federal Reserve based on accounts of business conditions from the 12 Federal Reserve Bank districts and published eight times per year -- which just happens to coincide with the number of annual meetings of the Fed's monetary policy group, the Federal Open Market Committee, or FOMC.
The good news is that real estate continues to improve in most of the country.
Declines in inventory levels were reported in Boston, New York, Philadelphia, Atlanta, Dallas and San Francisco; these declining inventories put some upward pressure on prices according to Boston, Atlanta and Dallas.
In general, outlooks were positive, with continued increases in activity expected, although the projected gains were more modest in Boston, Cleveland and Kansas City, Mo.
Manufacturing activity was more of a mixed bag in the time since the last Beige Book was released July 18.
Six districts reported falling demand for manufactured goods. Some of that slowdown was attributed to economic tumult in faraway lands.
Weakness overseas remains a problem for U.S. manufacturing. Reports from the Boston, Atlanta and Chicago districts explicitly mentioned it. Although Europe represented one notable problem, several districts also mentioned weakness in demand in Asia as an issue.
Agriculture, thanks to havoc wrought by the drought in the Midwest, has not been booming in much of the country either.
Agricultural commodity prices rose since the last reporting period. It's hard to sell cows when there's no water: Higher feed costs have resulted in smaller herd sizes and lower prices for livestock.
The Beige Book notes that prices of raw materials are somewhat increased. Grain and other food commodities were blamed, again, due to the drought. And higher gas prices were also reported in four districts. Chicago reported that higher crop prices were making their way into wholesale prices. As food and energy costs are stripped out of the core measure of inflation, the upward pressure on prices will likely not show up in official inflation numbers but may be noticed in the supermarket.
Some of the information from the Beige Book may show up in Federal Reserve Chairman Ben Bernanke's speech in Jackson Hole, Wyo., this Friday. The FOMC will definitely pay it close attention ahead of its Sept. 12 and 13 meeting.
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