David Kirkpatrick

April 16, 2009

Fed sees light at the end of tunnel

Filed under: Business, Politics — Tags: , , , , , — David Kirkpatrick @ 3:11 pm

The latest beige book report goes for optimism. I’m guessing they’re more just satisfied things aren’t spiraling even further down as opposed to seeing anything worth getting excited about. But I’ve been pretty contrarian about this financial crisis going back to the first days of this blog.

From the first link:

The Fed’s “Beige Book,” which offers an anecdotal look at economic activity in its 12 districts, said that “overall economic activity contracted further or remained weak,” noting that areas such as manufacturing were still depressed.

But the report said that five of the districts “noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level.”

The positives may have been the “green shoots” that Fed Chairman Ben Bernanke referred to recently when saying he saw some signs of life in the economy.

It was “consistent with the recent data that have shown improvement in some sectors of the economy, particularly consumption and housing,” said Michelle Meyer of Barclays Capital.

“While downward pressure continues, the pace of the declines may be easing up, somewhat. Not a major surprise in light of the data we’ve seen for March, but noteworthy nonetheless,” said Ian Lyngen of RBS Securities. “That said, the overall picture remains negative for the U.S. economic outlook — home prices continuing to decline and credit remaining ‘very tight’ throughout the country.”

In finance, the Beige Book said “bankers reported tight credit conditions, rising delinquencies and some deterioration of loan quality.”

Though the report said home prices and construction were largely falling, “better-than-expected buyer traffic led to a scattered pickup in sales in a number of Districts.”

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