Federal Reserve Beige Book: The State of The U.S. Economy
Tracking the direction of the U.S. economy can be a challenge, especially during periods of weakness. This is due to the overwhelming amount of available data and the conflicting nature of many indicators. One authoritative economic source is the Federal Reserve’s Beige Book, which is published eight times each year in advance of the FOMC (Federal Open Market Committee) meetings. The Federal Reserve has 12 Districts spread across the country (see map) and each District reports on the economic conditions of its territory. The latest report was just released. Here are a few of the highlights.
Fed Beige Book: April 17, 2013
According to the Federal Reserve, most Districts grew at a moderate pace from late February to early April. The Fed’s 49 page Beige Book, published Wednesday, April 17th, indicated that manufacturing increased in most Districts, especially in industries associated with residential construction and automobiles. However, several Districts reported that defense-related sectors were weak. Consumer spending grew at a modest pace, but was suppressed by the increase in the payroll tax, higher gas prices and winter weather. Travel and tourism increased in most Districts, aided by business and leisure travel.
Residential and commercial real estate showed signs of improvement in most Districts while loan demand was more tepid but still growing slightly. Home prices continued to rise overall. The employment picture remains weak with the most advances in manufacturing, residential construction, information technology and professional services sectors.
Commentary
From this, it can easily be seen how difficult it is to say with assurance whether we are on the road to recovery or on a path to serfdom. Given the enormous debt as a backdrop, the most recent jobs report, where only 88,000 new jobs were added, and the seemingly unending political grind over the issue of the role of government, a robust economy may not be a near-term event.
At this point, the Federal Government is still spending over $1 trillion more than it collects. Moreover, the Presidents new budget proposal, which may never see the light of day, calls for spending $3.7 trillion which would be the largest budget in our history. Although we are still a government “of the people, by the people, for the people,” by the time we wake up, I fear few of us will recognize what we see.
I watched an interesting TV commercial (which has since been banned) where a Chinese Teacher was speaking to his class about the reasons behind the collapse of great nations. During his lecture, he notes that the U.S. tried to spend and tax itself out of the Great Recession and amassed a great debt. Of course, China owned a large part of it and now “America works for us,” he chuckles.
Conclusion
No one can say for sure how this will turn out, but it’s clear we cannot continue on our present course. Unless we wake up and demand change (not the type we were promised in 2008), we will not be able to meet our obligations. It may be too late now, but as long as there’s a heartbeat, there’s hope!
Source: http://www.forbes.com/sites/mikepatton/2013/04/17/1651/