What the Beige Book Says About the Economy
The U.S. economy is seeing a bit of growth as employment picks up in several districts, according to the U.S. Federal Reserve’s latest Beige Book. The report, released on Wednesday, was cautiously optimistic as it noted some economic improvement in January and the first part of February, even in the beleaguered housing sector.
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“Residential real estate market conditions improved somewhat in most districts,” said the report, an anecdotal summary of business activity. “Hiring increased slightly across several districts.”
Manufacturing seemed to be especially robust in the period covered by the report, with several of the Fed’s 12 regional districts showing increases in new orders, shipments, or production, and many indicating stronger investment spending.
Fed Chairman Ben Bernanke expressed concern during testimony on Wednesday that the jobless rate’s sharp decline over the past few months may not last. Unemployment dropped to 8.3 in January, from a high of 9.1 percent in August.
“The decline in the unemployment rate over the past year has been somewhat more rapid than might have been expected, given that the economy appears to have been growing during that time frame at or below its longer-term trend,” Bernanke told the U.S. House of Representatives Financial Services Committee.
Fourth-quarter economic growth for the U.S. was upgraded to 3 percent on Wednesday, but many predict first-quarter growth to be closer to 2 percent. Inflation appears to be under control, according to the report, but it cautioned that consumers may feel a squeeze as some businesses pass on a recent increase in input costs due to rising energy prices.
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