The Fed is set to release the Beige Book an just under two hours, a report meant to be used by the FOMC as they prepare for their next meeting on August 10. What is it likely to say? My guess is it will look something like this.
- Economic activity improved modestly though activity varied between Fed districts
- Consumer spending and tourism activity generally increased though modestly
- Business spending also rose, on net, with employment and capital spending edging up but inventory investment slowing.
- By sector, nonfinancial services, manufacturing, and transportation continued to gradually improve.
- Residential real estate activity in many Districts weakened as demand was dragged forward by the April deadline for the homebuyer tax credit.
- Commercial real estate remained weak.
- Financial activity was little changed on balance, although a few Districts noted a modest increase in lending.
Bottom line: The Beige Book will suggest a slowdown of recent growth rates but not a slide toward double-dip, just like Bernanke in his testimony before Congress last week. The Fed will not hit the panic button soon but it will make sure the button is functioning, just in case…
