The economy weakened at the end of the year in almost all regions and industries across the nation, the Federal Reserve said in a report last week.
Retail sales declined, manufacturing eased, tourism was slow, the housing market deteriorated, credit was tight and the job market weakened in cities across the country, the Fed said in its beige book, an anecdotal report on the economy known by the color of the report’s cover.
Fed policymakers next meet Jan. 27 to 28. They are expected to keep their target for short-term interest rates near zero.
1st District
Maine, Massachusetts, New Hampshire, Rhode Island, Vermont, most of Connecticut. Retailers reported weak sales during the holidays, but a few said sales improved right before Christmas or after New Year’s Day. Still, retailers were freezing hiring or considering cutting workers. Some manufacturers reported double-digit declines in revenue or orders, and most factories said they planned to cut workers and investment spending in 2009. Contacts in the commercial real estate market used words such as “grim” and “depressing” to describe their situation, noting credit was tight. Home sales and prices were down.
2nd District
New York, northern New Jersey, Fairfield County, Conn. Tourism in New York City weakened — a decline in occupancy and room rates in Manhattan hotels led to a drop in revenue of nearly 20 percent from a year earlier. Broadway theater attendance was down 7 percent in December from a year earlier. Holiday retail sales were “sluggish but not disastrous.” Real estate agents said sellers were taking higher-price homes off the market. Manhattan apartment rental prices fell 20 percent or more. In the financial sector, year-end bonuses were down as much as 30 percent at healthy firms.
3rd District
Delaware, southern New Jersey, eastern Pennsylvania. Retailers reported drops in sales. Clothing and jewelry sales were particularly weak. Most stores were operating with lean inventories. Auto dealers reported slow sales. Credit quality declined for consumer and business loans. Real estate agents said buyers were making low bids for homes, and some were asking for more price cuts even after initial agreements were signed. Manufacturers reported further declines in shipments and new orders.
4th District
Ohio, eastern Kentucky, western Pennsylvania, northern West Virginia. Home sales were “extremely weak.” Some builders said they were renting out unsold homes and condominiums. Trucking companies reported declines in freight and were no longer hiring drivers. Manufacturing production was flat to down. Some factories reported double-digit declines in orders. Several manufacturers said they had renewed their credit lines but were paying higher rates. Retailers expected to cut back or freeze capital spending in 2009.
5th District
Maryland, Virginia, North Carolina, South Carolina, southern West Virginia, District of Columbia. Retailers reported disappointing sales, and several noted more customers were paying with cash; one department store manager said cashiers needed more coins to make change than before. Car sales fell. A contact at a central North Carolina hospital reported fewer elective medical procedures scheduled. Activity at ports dropped as imports and exports declined. Bankers noted more clients drawing on home equity lines of credit.
6th District
Alabama, Florida, Georgia, eastern Tennessee, southern Louisiana, southern Mississippi. The economy in the area was “weak.” Car sales were “dismal,” and dealers were cutting advertising and jobs. Some retailers said an inability to finance inventory may lead them to close stores.
7th District
Iowa, northern Indiana, northern Illinois, southern Michigan, southern Wisconsin. Activity declined further, with falling business and consumer confidence, slowing consumer spending and a deteriorating job market. Construction and manufacturing took another hit. Retailers reported falling sales, despite deep discounting, with clothing and big-ticket and luxury items taking a major hit. Auto dealers saw another drop in sales, though lower gas prices spurred more demand for light trucks.
8th District
Arkansas, southern Illinois, southern Indiana, western Kentucky, northern Mississippi, eastern Missouri, western Tennessee. Manufacturing weakened, the services sector contracted and housing continued its fall. Commercial real estate held steady, but commercial and industrial construction activity softened. Closures and layoffs were announced over a wide swath of manufacturing, including plastics, furniture and autos.
9th District
Minnesota, Montana, North Dakota, South Dakota, upper Michigan, northern Wisconsin. Activity fell slightly, and the job market worsened. Wage increases were modest. Prices kept falling, but the pace of decline stabilized.
10th District
Colorado, Kansas, Nebraska, Oklahoma, Wyoming, western Missouri, northern New Mexico. Conditions deteriorated. Sales of big-ticket durable goods, jewelry and high-end merchandise were particularly weak. Manufacturing dropped sharply, especially for firms with ties to the auto and railroad industries.
11th District
Texas, northern Louisiana, southern New Mexico. Manufacturing, commercial construction, energy and transportation services took a big hit, while accounting and legal services seemed to hold up the best. Bank lending dropped, and conditions weren’t expected to improve until the second half of 2009, “with a growing number of respondents now looking at early 2010.”
12th District
Alaska, Arizona, California, Hawaii, Idaho, Nevada, Oregon, Utah, Washington. Price pressures continued to ease, and wage pressures largely disappeared. Demand for farm goods was generally stable, while conditions in the oil industry weakened.
