The Fed’s Beige Book: Pessimism

By at 8 September, 2022, 8:30 am


by Raymond J. Keating –

The latest edition of the Federal Reserve’s Beige Book is out, and it offers more generally bad news on the economy.

Information in this survey of contacts outside the Fed was collected on or before August 29. And it basically found an economy not growing very much, with growing pessimism as to where we’re headed. That’s particularly discomforting given that the economy already has contracted in the first and second quarters of this year.

As reported, “Economic activity was unchanged, on balance, since early July…”

On the positive end, consumer spending held “steady,” and leisure travel activity was solid, with some pickup in business and group travel.

Meanwhile, some moderation in the rate of price increases was reported. However, price levels “remained highly elevated.” For good measure, it was noted, “Most contacts expected price pressures to persist at least through the end of the year.”

On the jobs front, the labor market, if you will, continues trying to right itself. While conditions remained tight, employment growth was reported as “modest to moderate,” and worker retention improved.

But an assortment of negatives were noteworthy in this survey. Supply chain and labor issues continued to hamper manufacturing, with “some reports of declining output.” And while energy demand was strong, the sector also continued to be “constrained by supply chain bottlenecks for critical components.” In addition, commercial real estate was soft, and loan demand mixed, though there was “generally strong demand for credit cards and commercial and industrial loans.”

Among the 12 Fed districts, four reported declines in economic activity, two reported no growth, three reported slight or slowing growth, and three noted modest growth.

Looking ahead, the outlook for economic growth “remained generally weak.”

None of this is encouraging. To the contrary, it’s rather pessimistic. But it’s not surprising given that the Biden administration, Congress and the Fed seem intent on doing everything wrong – such as higher taxes, more regulation, increased government spending, protectionist trade policies and grossly misguided monetary policy – and making matters worse.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council. His latest book is The Weekly Economist: 52 Quick Reads to Help You Think Like an Economist.



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