The Federal Reserve released its Beige Book yesterday, an anecdotal look at the economies in the regions of its 12 member banks. Its a good overview of the economy performed by their in-house economists who interview their contacts in each region to get a “ground level” sense of the major sectors, including: Consumer Spending and Tourism, Business Spending and Hiring, Construction and Real Estate, Manufacturing, Banking and Finance, Prices and Labor Costs, Energy and Natural Resources, Agriculture.

Five regions indicated that retail sales of items related to housing–such as furniture and home repair materials–were weak or declining.

Most Districts said that residential construction and real estate activity continued to decline on balance. Many Districts, however, noted increased activity in some individual market locales or segments. Atlanta, Chicago, St. Louis, and Minneapolis said construction decreased. Boston and Kansas City said housing markets remained “soft” and “weak,” respectively, while San Francisco indicated that residential markets were weak and had slowed further in some areas. New York said markets were mixed but stable. Two notable exceptions were the Cleveland and Richmond regions, which experienced slight increases in sales. Atlanta said home inventories remained high, as did Dallas (even after a slight decline in the recent period). Inventories increased in Kansas City, but they declined in New York, and contacts in Boston and Cleveland described the number of homes for sale as “normal” and “acceptable,” respectively. District reports on home price appreciation were mixed: Boston noted a return to price appreciation and Kansas City indicated slower rates of decline. But Richmond and Chicago reported slower rates of increase or the beginning of declines, and in the Dallas District, some contacts projected a correction in entry-level home prices. Looking ahead, contacts in the Cleveland District were uncertain about how long it would be until the market turned, and analysts in Dallas had revised their housing outlook down. Contacts in Atlanta expected further declines overall, though they anticipated the market in Florida would be flat.

…manufacturers of housing-related products (lumber, stone, glass, cement, appliances, and furniture) typically reported declines.

My take-aways were:

  • Demand for products designed for use in the housing sector is generally weak. No surprise there. Beside employment, this is one of the key influences housing has over the economy.
  • Sales levels and new development are down, which is consistent with national housing stats. I thought it was important to appreciate (no pun intended) that there was disparity between various markets, in terms of their performance, although the general picture was generally negative.

The Beige Book was originally red.


One Response to “Color Housing Any Way You Want, As Long As Its Beige”

  1. clark says:


    Interesting comments, but I’d extend the analysis to look at the question of ‘containment’ from the expanding mortgage debacle. Besides weak housing and retail stats, what’s happening to construction and housing related employment in these districts as well as employment overall. For the former, I’m sure the answers range from ‘down a bit’ to ‘down a lot’. As to the latter, I think the jury’s out.

    While Ben Bernanke, Hank Paulson and Ken Lewis (B of A chairman) want us to believe housing problems are isolated, equity investors, underwriters, high yield bond/loan syndicators, etc. might question that optimism today. (A cynic might even say ‘myopia’.)

    These thoughts might give you Matrix topics for the rest of the summer. (No charge!)