There is no recession so far, based on the latest anecdotal reports from regional Fed Banks. The Beige Book prepared for the November 1-2 FOMC meeting stated that the twelve District Banks found overall economic activity continued to expand in September, although many Districts described the pace of growth as "modest" or "slight." Contacts generally noted weaker or less certain outlooks for business conditions which are weighing on plans for business spending. Firms are reluctant to build inventories significantly due to uncertainty. Auto dealers were an exception, still rebuilding from Japanese supply shortages and with auto sales up. Consumer spending was up slightly in most Districts, with auto sales and tourism leading the way in several of them.
By sector, manufacturing and transportation activity was reported to have increased on balance. A few Districts also reported slight improvements in construction and real estate activity. Nonetheless, overall conditions for both residential and commercial real estate remained weak.
Respondents indicated that labor market conditions were little changed, on balance, in September. Several Districts cited only limited and selective demand for new hires. Some Districts, however, noted that firms in some sectors that were hiring more broadly (such as manufacturing, transportation, and energy) were also experiencing difficulties in finding appropriately skilled or qualified labor. A number of Districts reported that hiring was being restrained by elevated uncertainty or lower expectations for their future growth. There were mixed reports on the direction of upcoming seasonal hiring.
Most Districts reported that wage pressures remained subdued. Exceptions were generally for workers with specialized skills or in areas where firms were having difficulty finding workers, such as in information technology, in the energy industry, and for truck drivers.
Most other cost pressures moderated in September. Most Districts reported a general decline in commodity prices, including prices of oil and industrial metals. Many Districts indicated that there continued to be some further pass-through of past increases to wholesale prices. Though retail contacts noted a hesitation to increase prices with demand still weak, many Districts reported increased pass-through of costs in the retail sector, particularly for food and cotton-based goods.
Overall, the Beige Book argues that the recovery continues but at a very sluggish pace and with continued high unemployment. The latest anecdotal news on inflation is a little more encouraging than the latest PPI and CPI reports showing strong headline inflation.