Here we go again. Again, the media and its punditry have set off the fire alarm. “Everyone start running for the doors. The double-dip is coming to consume us all.” Are you sure? Below is my synopsis of the Fed’s Beige Book report summary, the definitive 2-month picture of economic activity in the USA. I promise I did not slant this in any way.
Economic activity in the United States continued to grow in April and May, but higher food and energy prices, severe weather conditions and supply disruptions caused by the earthquake and tsunami in Japan put pressure on consumers … The pace of growth slowed in the New York, Philadelphia, Atlanta, and Chicago districts. The Dallas district accelerated, while other areas showed growth continuing at a steady pace …
Okay, so where is the fire?
The beige book also noted that manufacturing in general expanded, and that activity in the nonfinancial service sectors grew steadily, led by the information technology and professional services industries.
No, really, where is the fire?
Compared with the previous beige book, which raised questions about the impact of the March disaster in Japan, this survey suggested that some of the economic headwinds could be receding. “What we are seeing is that the business community and banking community see this as a transitory thing … Businesses in general are seeing through the soft spot.”
Is there a fire?
The report said that the supply disruptions caused by the events in Japan had resulted in a reduction in the flow of new cars to dealer inventories, which in turn had held down sales. In addition, bad weather and high gas prices hurt casino, retail, and agricultural activity in several regions. Those factors affected growth in consumer spending, with most districts indicating steady to modestly increasing activity …
Okay, folks, come on, really, is there a fire?
Business activity related to the agriculture sector varied because of extreme weather. Cool temperatures delayed crops in the San Francisco Fed district; flooding on the Mississippi River slowed activity for farmers in the St. Louis and Atlanta districts. In the Dallas district, severe drought hurt the wheat crop, while wildfires led to “significant” agricultural losses …
Oh wait … I see some flames below, finally …
Residential construction and real estate continued to show widespread weakness …
Trade in the day – Invest in your life …
