Posted on 06/10/2010 12:04:57 AM PDT by bruinbirdman
Fed's beige book repeats the bullish mantra of recovery but jobs, foreclosures and small business lending tell a different picture
Despite a somewhat optimistic snapshot of the U.S. economy, the Federal Reserve's beige book offered little in the way of meaningful hope for solid economic or stock market gains in the near future.
At least that's the way the market digested it considering the major indexes tumbled Wednesday afternoon after the report's release. An anecdotal take on current regional economic conditions, the beige book showed that the economy is improving across all 12 Fed districts, though at a slow and often choppy pace. It was the first time all 12 districts demonstrated strengthening since 2007, before the subprime mortgage crisis and ensuing recession.
Jack Reutemann Jr., founder and CEO of Research Financial Strategies, cautioned that economic improvements have been marginal, at best. He bearishly likens the U.S. economy to a hospital patient who has regained consciousness but remains in intensive care. "The political bent is to brag about minimal good news and ignore maximum bad news," he tells Forbes. But when you consider insignificant net new job creation and true nationwide unemployment at around 18% (including Americans who are underemployed and those who have taken themselves out of the job market altogether), the recovery seems gaunt.
The Fed's beige book did show strength in manufacturing, retail sales, tourism and housing, though the latter definitely got a boost from the now-expired tax credit for home buyers. (See "Will The Home Buyer Tax Credit Help?") The jobs market, unsurprisingly, showed only a slight improvement. So there is still hope, but it's a long road ahead.
Last week the Labor Department reported that all net job gains in the month of May came from temporary census hiring, not from private companies. Though on
(Excerpt) Read more at forbes.com ...
The details in the new housing data show a 5% decrease in sales from April to May, a 10% decline in new homes under contract, and a 20% decline from 2009 (a crappy year in itself) to today in the number of people who are looking for homes on-line.
Yet the Fed is optimistic. About what?!
"The Recoveryless Recovery?"
All I know is what I see in my city... 20-25% of people with no jobs... the first billion-dollar "condo conversion" we ever had in foreclosure... the biggest Realtor shuttered and shut, while a competitor touts "Foreclosure Bus Tours!"
Between one fourth and one third of businesses standing empty, with "first month's rent free!" crossed out and "two months FREE!" under it...
Franz Kafka and Phillip K. Dick could not have collaborated on a storyline and come up with anything as surreal as what I am seeing here.
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