"Go Slow," Says the Beige Book

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The latest Beige Book report from the Federal Reserve exactly describes the weak, jobless recovery economists warned us about.

The name of the twice-a-quarter report perfectly reflects its current contents. Beige: a bland color, a little darker than vanilla ice cream. Unlike red, which says "stop," or green, which says "go," beige says "go slow."

"While economic activity remains at a low level, conditions have improved modestly," reads the the new year's first Beige Book report, released on January 13. The report skips much of the statistics found in other Fed reports, instead serving up anecdotal evidence from the 12 Fed districts. More than other reports, it tends capture the mood of the economy.
It's certainly not an economy primed to create new jobs or support a robust housing recovery. "The labor market is still soft in most Federal Reserve Districts," says the report, although New York reported a modest pickup in hiring and several firms in St. Louis announced plans to hire new workers. The New York Times detailed the mixed picture in regions across the country this morning.

The findings match this week's weak unemployment data. Initial claims for unemployment were up 11,000, hitting 444,000 for the week ending January 9. But the 4-week moving average of initial claims was 440,750, down 9,000 from the previous week's revised average of 449,750. And more people tend to lose their jobs in the week after the holiday. So the news isn't horrible. But it's still not good. Beige.

The housing market is also giving mixed signals, according to the report. "Toward the end of 2009, home sales increased in most Districts, especially for lower-priced homes," says the Beige Book. However, home prices appeared to have changed little since the last Beige Book, and residential construction remained at low levels in most Districts. Commercial real estate was still weak in nearly all Districts with rising vacancy rates and falling rents.
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