Fed’s Beige Book: Telling It Like It Is

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In case you couldn’t wait for just one more after-the-fact observation report from the Federal Reserve, the January Beige Book has been released.  While the economy is gaining, the Fed noted that the economy remains weak enough that inflationary pressures and the job market both remain soft.  The good news: some form of strengthening was seen in all 12 districts during November and December.

Data was collected and the cut off date for the preparation was January 3, 2011, and this is some of the data to be used at the January 25 and 26 FOMC meeting.  New York, Boston, Richmond, and Philadelphia were called as improving.  “Modest to moderate” improvements were seen in Atlanta, Cleveland, Chicago, Dallas, K.C. and St. Louis.

The improvements noted included better 2010 holiday sales, better car sales and better industrial production.  It seems that retailers cannot pass on higher prices because there is a note of higher costs for manufacturers and retailers matched by higher retail price competition.

The big kicker is jobs.  While there is an obvious need for improvement, the Fed said the job market was firming in most parts of the country.  The downside is that the worker overhang is keeping wage pressure very low.

You know the rest.  The good news for 90.6% of working America is that things are getting better for most.  The bad news is that there are still too few job creations to propel the economy into continued springing action.

The media makes much of the Beige Book.  We don’t.  Chances are, if you learn very much from the Beige Book it is because you have been sick or away on vacation.

JON C. OGG

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