The Beige Book is out and the district by district report on business activity is somewhat dismal. The good news is that the pace of bad news is not really out of line with what anyone would have expected. The bad news is that everyone is now just about braced for Armageddon.
Most districts saw serious declines to sluggish retail activity atbest. Real estate continued to be soft to weakening further, althoughthere were at least some slight gains in loan activity at the expenseof credit quality. Home prices continued declining in just about alldistricts. Tourism slowed, and declines in employment and compensationare anticipated during 2009. Factory orders and manufacturingproduction continued to soften. And if you didn’t guess this one, autosales stank.
One area may offer at least some lightening up of the deflationconcerns after a note that the downward trend in raw materials pricesbegan flattening.
Dr. Pangloss would be telling Candide here that the worst is behind. The problem is that Dr. Pangloss was wrong time after time before he was finally right.
Jon C. Ogg
January 14, 2009