The stock market has been telling a positive story since the March low–the Dow Jones Industrial Average has gained over 2,400 points!
The Federal Reserve reported in its “Beige Book” business survey, that the 12 regional banks saw a slowing in the pace of economic decline–that means, economic activity is becoming more stable.
So what specifically is improving?
- The Fed expects a modest recovery in manufacturing over the next 6-12 months.
- Inflation slowed to a 0.1% annual pace in May. In September 2007, it was 2.6%. That’s a big improvement.
- U.S. home prices showed the first monthly gain in three years. Maybe home prices are finally stabilizing.
- Purchases of new homes increased from the previous month.
Of course, things are not totally positive.
- In June, 467,000 jobs were eliminated, bringing the total to 6.5 million since the recession began in December 2007.
- Commercial real estate continues to weaken.
- Consumer spending continues to be below year-ago levels in most regions.
The Beige Book, published eight times a year, is anecdotal information on current economic conditions in each Federal Reserve Bank District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources. Information is provided by District and sector. Check The Beige Book for a summary of the conditions in your area.
Lesson: The Federal Reserve tracks all aspects of the economy and uses that data to guide them in setting monetary policy.
