Fed Beige Book Sees Stabilization Signals

Across the United States, economic activity is picking up, according to the "Beige Book" survey conducted by the Federal Reserve's 12 regional banks.

The evidence of recovery, though still weak, provides clear support to the views of economists who believe the recession has ended.

The Fed's latest snapshot of business conditions nationwide found "many sectors" of the economy either stabilized or logged modest improvements over the last six weeks. The pickups, though, often were from "depressed" levels of activity.

Still, the new report adds to evidence that a recovery has started from the worst recession since the 1930s. Only two of the Fed's 12 regions — Atlanta and St. Louis — reported weaker overall economic activity.

An $8,000 credit for first-time homebuyers boosted the housing sector. There's been concern among private economists and some lawmakers that recent gains in housing will fizzle out when the credit ends. It is slated to expire Nov. 30, although some in Congress are mulling an extension.

Meanwhile, factories increased production as businesses restocked depleted inventories. Part of that restocking was due to the now-defunct Cash for Clunkers rebate program, which caused a brief burst in car sales.

Both housing and manufacturing continued a "pattern of improvement that emerged over the summer," the Fed observed.

"Reports of gains in economic activity generally outnumber declines, but virtually every reference to improvement was qualified as either small or scattered," the Fed survey said.

The nation's unemployment rate climbed to a 26-year high of 9.8 percent in September, and is expected to top 10 percent this year. Economists predict it will rise as high as 10.5 percent by the middle of next year before slowly drifting down.

Districts reported "little or no increase to either price or wage pressures," but there were some references to downward pressures, according to the survey.

In a separate report, the Labor Department found that unemployment rose in 23 states last month. While layoffs have slowed, companies remain reluctant to hire. Forty-three states reported job losses in September; only seven gained jobs.

Many analysts believe the economy started to grow again in the third quarter at a pace of at least 3 percent, and is continuing to expand now. The government releases third-quarter results next week. If analysts are right, that would mark a turning point for the economy, which has contracted for a record four straight quarters.

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