The newest Beige Book from the Federal Reserve might make you wonder why on earth quantitative easing is necessary. Low growth is still okay, but the jobs issue is still front and center. Will quantitative easing and lower and lower rates force hiring?
The Federal Reserve noted that the September and early October period did show growth with some districts still calling a sluggish environment. Overall, the Federal Reserve seems to be upgrading its anticipations of the economy and downgrading real deflationary risks. There is also still no call for a double-dip recession.
It was hard to ignore this about Joe Public: “consumers remained price-sensitive, and purchases were mostly limited to necessities and non-discretionary items.”
Manufacturing grew and production and new orders rose in most Districts, while demand for non-financial services was “stable to modestly increasing overall.”
There is still no real jobs improvement as you have seen each week. The Fed said that hiring remained limited and many firms are reluctant to add to permanent payrolls due to economic softness. Wage pressures remained minimal, but the Fed noted widespread reports across districts that firms “anticipated increased costs of employee benefits as a result of healthcare reform.”
Housing remained weak in most districts. There is also an upgrade on Joe Public as the Fed noted that there was a slow improvement in consumer confidence. The inflation-deflation argument was also far less deflationary and maybe even a hint of inflationary as prices of goods of services were stable despite higher input costs.
Is it fair to ask the FOMC members and the Federal Reserve bankers to quit speaking and to quit reporting opinions? With the exception of a few instances of dissent, most of the data and efforts still seem to be reactionary rather than proactive. Such is life.
The FULL BEIGE BOOK recap is here.
JON C. OGG
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