Beige Book

The Lehmann Letter (SM)

Today the Fed released its Beige Book report on economic conditions:

http://www.federalreserve.gov/fomc/beigebook/2010/20100303/default.htm .

Here is the lead paragraph:

“Reports from the twelve Federal Reserve Districts indicated that economic conditions continued to expand since the last report, although severe snowstorms in early February held back activity in several Districts. Nine Districts reported that economic activity improved, but in most cases the increases were modest. Overall conditions were described as mixed in the Atlanta and St. Louis Districts, though St. Louis noted further signs of improvement in some areas. Richmond reported that economic activity slackened or remained soft across most sectors, due importantly to especially severe February weather in that region.”

That's a good report.

For a guarded assessment of the future, take a look at David Leonhardt's article in today's New York Times business section:

http://www.nytimes.com/2010/03/03/business/economy/03leonhardt.html?ref=business

Mr. Leonhardt points to some key troublespots. The boost the economy derived from the inventory recovery is coming to an end. The benefits from the bank bailout and stimulus package will soon peak. Troubles remain in residential real estate. None of this bodes well for employment, which will probably remain weak for quite some time.

We may not be headed for a double dip, but let's hope that forecast is not just a matter of definition.

© 2010 Michael B. Lehmann