The Federal Reserve released its Beige Book of current economic conditions on Wednesday afternoon, with the overall assessment that the economy "expanded at a modest to moderate pace." While stock markets shrugged – the S&P 500 remains in slight negative territory in afternoon trading – economists saw some encouraging signs in the report, but also a few reasons to remain sober on the economic recovery. Here are a few reactions.
Alistair Bentley, Toronto-Dominion Bank: "Consistent with hard economic data releases, the latest Beige Book points to an economy vastly improved from the summer and fall months of 2011. Yet despite this momentum, the Beige Book offers a reminder that the market for owner occupied housing is still in a depression. Given the pivotal role housing plays in the economy – including building, financing and furnishing – this remains a big impediment to a full-fledged recovery."
Krishen Rangasamy, National Bank Financial: "The upbeat message from the Beige Book, particularly about consumption and manufacturing bodes well for December retail data due tomorrow (consensus is looking for a 0.3 per cent increase in sales) and next week's industrial production data for December. That's consistent with our view that the U.S. posted its best quarter of 2011 in Q4. The fact that lending activity remains normal is a good sign that the European credit crunch has yet to cross the Atlantic."
Jennifer Lee, BMO Nesbitt Burns: "The details from the Federal Reserve's business contacts confirm what everyone has been seeing in the economic data….from retail sales to auto sales to manufacturing…..activity is improving. But the usual suspects…..housing, wages….remain soft."
David Berman