Sad News From The Fed

The Fed’s Beige Book Report is out and should dispel most talk of “green shoots” at least for a day or two.

The report said that overall, the economy remained weak or deteriorated further from mid-April to May. There was some talk of second derivatives — the pace of decline is abating — and improving economic expectations, but that’s about the extent of the good news.

From Fox Business:

Five of the Fed’s 12 districts said that economic conditions in their regions were still deteriorating, but the rate of deterioration had moderated. The commentary is similar to the last survey put out by the Fed six weeks ago.

In the manufacturing sector, the Federal Reserve said activity during the period declined or remained very weak levels in most of the central bank’s districts. The surveys done by the Atlanta and Kansas City banks indicated that the rate of decline moderated or slowed, while New York and Dallas described the sector as stabilizing or having stabilized.

The Fed said that tight credit conditions were “hampering” the auto sector and vehicle sales, which remained at depressed levels during the period.

The service sector remained weak, according to the Fed. Select districts reported some moderate increases in activity for certain specific sectors, but “for the most part activity continued to decline.”

As noted in other separate reports, the Fed said that a number of Districts reported home sales increasing and that new home construction appeared to have stabilized at very low levels.

Across the country, the Federal Reserve said they did not experience any signs of inflation, saying that all its districts reported that “prices at all stages of production were generally flat or falling.” The only exception was the highly reported story of rising oil prices.

Throw that in with a weak 10 year note auction and a coupon now barely below 4% and this becomes a day to forget. Throw some water and fertilizer on those plants. They’re starting to look a little parched.

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