Thursday, March 4, 2010

Beige in Winter

The Fed released its quarterly Beige Book yesterday, detailing economic conditions in each of 12 national regions. New Jersey is cleaved down the middle between the New York and Philadelphia regions, so let's take a closer look at those two areas.

One key difference is that the Philadelphia (and South Jersey) report expects business lending to increase just slightly through the rest of the year, but in New York (and North Jersey), the outlook is even more pessimistic: there, "bankers report weakening in loan demand in all categories." Similarly, commercial real estate in the Philly area is expected to advance because of reduced rents, albeit without much new construction, while the New York area is described as "exceptionally weak." Car sales, for some reason, also looked stronger in the Philadelphia area.

The two areas track each other in some key ways: Both report that business conditions are improving, although very slowly. Retail sales were up in both regions. Then again, both regions also reported that economic activity slackened somewhat during the snowstorms of February; it seems that Adam Smith is sometimes no match for Mother Nature.

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