8 August 2001, 23:02 The FED Beige Book Summary (part 2)
WASHINGTON (MktNews) - The following is the second and final part
of the text of the Summary of Commentary on Current Economic Conditions,
also known as the Beige Book, released Wednesday by the Federal Reserve:
Banking and Finance
Loan demand was flat to down in most Districts in recent weeks.
However, the composition of the slowdown differed by region. In Kansas
City and Philadelphia, commercial and industrial lending picked up,
while consumer lending declined. Declines in lending in Atlanta,
Chicago, and Richmond were largely in the commercial sector. In St.
Louis, all types of loans declined, although the most pronounced
reductions were in consumer borrowing. In Cleveland and New York, loan
demand remained relatively flat, as both consumers and businesses
curtailed borrowing. Several Districts reported increases in home
mortgage lending.
Overall, Districts characterized financial markets as cautious,
with both borrowers and lenders pulling back in response to economic
uncertainty. There were some reports of deteriorating credit quality,
particularly for credits to manufacturing and agricultural businesses. A
number of Districts reported that lenders had tightened standards in
recent weeks, particularly for business loans.
Labor Markets, Wages, and Prices
Most Districts reported that conditions in labor markets remained
steady or loosened somewhat in recent weeks. Layoffs in many high-tech
manufacturing and service firms boosted the number of highly skilled
workers applying for jobs through temporary employment agencies.
Employers in a number of Districts noted greater ease in finding and
keeping qualified workers.
Looser labor markets in most Districts helped to contain wage
pressures in recent months. However, benefit costs rose, particularly
for health and other forms of insurance coverage. Rising insurance
premiums and the slowing economy reportedly prompted some employers to
reevaluate benefit packages. Kansas City reported that firms were
working on ways to reduce employee benefits such as free parking and
health club memberships.
Fuel and energy prices fell in June and July in most Districts,
lessening the burden on businesses and easing pressure on consumer
budgets. Lower gasoline prices allowed shippers and truckers to reduce
or remove fuel surcharges imposed earlier this year. Lower energy costs
also contributed to price declines for a number of manufactured goods.
However, upward price pressure was reported for pharmaceuticals, various
services, and single-family housing in some regions. In addition, retail
electricity rates were up sharply in California in June, as previously
authorized rate hikes took effect. In general, however, declining input
costs and stiff domestic and foreign competition continued to restrain
consumer prices.
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