Good news everyone! The Fed believes that the worst of the recession has passed. At least that is what its snapshot of economic conditions from yesterday showed. The data indicated that the "downward trend is showing signs of moderating" in five of the Fed's 12 regions.
Furthermore, "several" regions indicate that their expectations of future business activity have improved, but there will not be a "substantial increase" through the end of the year. In the last survey, "several regions" indicated signs of some stability at low levels. Taken in whole, the assessments of businesses on the "front lines" of the economy appear slightly better than in the last report, which was issued in mid-April.
According to the Beige Book, the recession's grip on the economy is loosening. In the final quarter of last year, the economy contracted by 6.3%, followed by 5.7% in the first quarter of this year. This six-month performance is the worst seen in the past 50 years. Nevertheless, analysts believe that the economy is shrinking at a 1% to 3% pace in the current quarter. If this is truly the case, it would indicate massive moderation from the six-month drop.
Digging into the Beige Book results a bit, new car sales were "depressed" across most Fed regions. Housing sales on the other hand showed some positive action, as eight of the Fed's 12 regions saw a slight increase in sales. The most telling data may be that consumer spending "remained soft" because consumers were purchasing "less expensive necessities." It will take some time, but we may learn if this data indicates that green shoots are forming.
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