One of the ways we earn our keep around here is by reading things like the "Beige Book," so you don’t have to. Here’s a summary of the none too pretty picture painted in our very own 9th Federal Reserve District:
Summary: "Ninth District economic activity was stagnant since the last report. Decreased activity was noted in consumer spending and services, while residential construction and real estate remained slow."
Consumer Spending: "Consumer spending decreased slightly in some areas."
Residential Real Estate: Residential real estate remained slow. Second-quarter home sales in central Minnesota were down 14 percent from a year earlier.
Manufacturing: "Overall manufacturing activity was up since the last report"…"Business is booming due to exports," commented a Minnesota metal fabricator.
Employment and Prices: "Labor markets loosened somewhat since the last report…Wage increases were moderate…Prices for many commodities and energy have decreased since mid July, but remain at relatively high levels."
More than anything else, a healthy real estate market is about a strong local economy with ready access to employment. Something we still have, by all indications. But perhaps not for long – though this report is not without bright spots, it seems to paint a picture of an economy in a real estate and banking led slowdown.
Sure, home prices are starting to look relatively attractive, pending sales are stringing together some YOY gains, and interest rates remain anchored in the low 6% range. But the bigger economic picture put forth in the Beige Book is not exactly the stuff of a housing market turnaround.