There were no surprises in the latest Beige Book. The Fed’s periodic report proclaimed, “[E]conomic activity continued to stabilize in July and August.” This statement confirmed the data provided by several other reports.
Overall, the tone of the report is that the U.S. economy has already hit bottom and is starting to climb its way out of a deep hole. However, as I have said many times, this recovery will not feel like a recovery to many Americans.
Most districts credited the “Cash For Clunkers” program for helping sales, though some noted that it had an adverse affect on used car sales. The program was also credited for providing a short-term lift to manufacturing. (Of course, what remains to be seen is whether or not Ford [F], CarMax [KMX] and other automotive-related companies lost future sales because of the government bailout.)
Jobs, on the other hand, remain difficult to find. Some districts did note an improvement in temporary and health care hiring, but others noted cuts by local and state governments. Wages were stagnant with no wage pressures reported. (This partially explains why analysts are NOT raising their profit forecasts on Manpower [MAN].)
Retail estate is going through 2 stages. Residential housing is stabilizing, though much of the interest remains at the low-end of the market. (Good for K.B. Home [KB], but not so good for Toll Brothers [TOL].) Commercial real estate, on the other hand, continues to be weak. (Bad news for Liberty Trust [LRY] and several other REITs.)
Credit standards were described as “tight.” Though demand for auto loans rose, as would be expected, credit quality deteriorated in several districts. This a big reason why companies such as U.S. Bancorp (USB) are not fully out of the woods.
Overall, for investors, today’s report does not change anything. It merely confirms the economy is slowly moving towards a recovery. It’s a good thing, but also something that was already known.
Read the full analyst report on “F”
Read the full analyst report on “KMX”
Read the full analyst report on “MAN”
Read the full analyst report on “KBH”
Read the full analyst report on “TOL”
Read the full analyst report on “LRY”
Read the full analyst report on “USB”
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