Beige Book: All Is Good (As If You Didn't Know); Snow Wordcount: Six Instances

Tyler Durden's picture

FOMC's Beige Book indicates that things could not be better... if you ignore the record unemployment of course and the tens of trillions in rollover debt, and the quadrillions in 2100 deficits, and that damn snowfall which came at a very sensitive time for the economy. So yes, aside from that, all is great.

March 3 Beige Book

Prepared at the Federal Reserve Bank of Kansas
City and based on information collected on or before February 22, 2010.
This document summarizes comments received from businesses and other
contacts outside the Federal Reserve and is not a commentary on the
views of Federal Reserve officials.

Reports from the twelve Federal Reserve Districts indicated that
economic conditions continued to expand since the last report, although
severe snowstorms in early February held back activity in several
. Nine Districts reported that economic activity improved, but
in most cases the increases were modest. Overall conditions were
described as mixed in the Atlanta and St. Louis Districts, though St.
Louis noted further signs of improvement in some areas. Richmond
reported that economic activity slackened or remained soft across most
sectors, due importantly to especially severe February weather in that

Consumer spending improved slightly in many Districts since the last
survey, but severe snowstorms in early February limited activity in
some Districts.
Tourist activity was reported as increased or mixed,
with some improvement in hotel occupancies. The demand for services was
generally positive across Districts, most notably for health-care and
information technology firms. Of the five Districts reporting on
transportation, three characterized activity as improved over the
previous survey. Manufacturing activity strengthened in most regions,
particularly in the high-tech equipment, automobile, and metal
industries. Residential real estate markets improved in a number of
Districts, although several Districts noted that activity softened or
remained weak partly due to extreme winter weather. Most Districts
characterized commercial real estate and construction activity as weak
or having declined further, but some Districts noted slight
stabilization and a few signs of modest improvement. Loan demand
remained weak, and lending standards remained tight across the country.
Harsh weather continued to negatively affect agricultural activity,
although some Districts reported favorable crop conditions. Districts
reporting on energy activity said it continued to strengthen,
particularly drilling for natural gas.

Price pressures were
mostly limited, with the exception of some increases in raw materials
prices. Even with input costs rising, selling prices remained stable
due to competitive pressures and limited pricing power. Although some
Districts reported an uptick in hiring or a slowdown in layoffs, labor
markets generally remained soft throughout the nation, which resulted
in minimal wage pressures.

Consumer Spending and Tourism
Consumer spending showed signs of improvement in many Districts since
the last report but was hampered in several regions by severe weather
conditions in early February. Retail sales improved in the Chicago,
Minneapolis, Dallas, and San Francisco Districts, and New York said
sales were well above year-ago levels in January and met expectations
in February despite inclement weather. Philadelphia also reported that
sales were moving up slowly until snowstorms hit in February. Boston
and Cleveland characterized sales as mixed but slightly higher overall
than year ago levels. Sales were lower than expected in the Atlanta and
Kansas City Districts and were down from year-ago levels in the St.
Louis District. Several Districts reported that sales were strongest
for lower-priced items, while sales of luxury and big ticket items
remained sluggish. However, San Francisco noted scattered reports of
increased discretionary spending, and Cleveland said some retailers
noted a broader, if still slight, increase in demand across a variety
of products. Inventories were being managed carefully and held at
fairly low levels in most Districts, but Chicago said rising sales were
leading retailers to begin rebuilding inventories from low levels.

sales were generally reported as flat or down, with a few Districts
again noting that some of the sluggishness was likely due to poor
weather conditions. New York, Cleveland, and San Francisco all noted
some softening in new auto sales, though New York cited brisk sales of
used vehicles. Chicago and Kansas City also reported declining auto
sales, while Dallas noted some seasonal softness and Atlanta said sales
remained weak. Some Districts reported modest improvement in auto
credit conditions. Cleveland noted that many consumers remain reliant
on manufacturers' incentives, and auto dealers in the Chicago District
blamed part of their recent sales decline on reduced factory incentives.

reporting on tourism said that activity was either rising or mixed
since the last survey period. Ski resorts in the Richmond and Kansas
City Districts reported at least modest rebounds in activity from
year-ago levels, while Minneapolis characterized skier visits to a
Montana resort as flat. New York said hotel occupancies in Manhattan
were up considerably from a year ago in January and Broadway theatre
activity was robust before falling off due to weather in February.
Atlanta also reported rising tourism activity related to several
successful major sporting events and a well-attended Mardi Gras in New
Orleans. San Francisco noted increases in visitors to Hawaii and Las
Vegas and said hotel occupancies stabilized in some other areas.

Nonfinancial Services
Nonfinancial services activity was reported as steady or improved by
the majority of Districts. Boston, St. Louis, Minneapolis, and San
Francisco reported generally solid demand in health-care services,
although Minneapolis noted continued weakness in elective procedures.
New York indicated that a growing number of service firms planned to
increase capital spending in the months ahead, but investment
expectations diminished among high-tech companies in the Kansas City
District. Richmond reported that service revenues fell due to the
record snowstorms,
but a few contacts saw a slight pickup in demand,
particularly architectural firms, hospitals, and financial service

In transportation services, Cleveland, Atlanta, and Kansas City
reported an improvement in activity since the last survey, while Dallas
said activity was mixed and St. Louis noted large job cuts in the
industry. Regional rail loadings were above year-ago levels in the
Atlanta District, especially for autos, chemicals, metals, and some
construction-related equipment. Intermodal firms in the Dallas District
reported no change in cargo volumes, with a rise in exports being
offset by a decline in imports. Although shipping volumes increased,
Cleveland noted that margins remained depressed due to over-capacity
issues, limiting investment in new trucks.

Manufacturing activity increased
further in most Districts, although Minneapolis, Dallas, and San
Francisco characterized overall activity as flat or mixed. Philadelphia
reported widespread production increases across most industries, and
manufacturers in the Cleveland District reported a general rise in
capacity utilization. Many Districts reported strong production in
metals, and the Boston, Dallas, and San Francisco Districts noted
strength in high-tech equipment, particularly semiconductors.
Cleveland, Chicago, St. Louis, and Dallas noted solid improvements in
auto-related manufacturing. A consumer goods company in the Boston
District said European sales were at healthier levels. Contacts in the
Chicago District reported strong growth in Asian exports but remained
concerned about China's underlying economic strength. Dallas reported
that exports for natural-gas based products remained strong, but weak
demand for refined products has trimmed margins and cut capacity
utilization further. Construction-related activity remained weak in the
Chicago and Dallas Districts, and new orders for commercial aircraft
and parts were sluggish in the San Francisco District. Philadelphia and
Richmond noted productions delays due to the winter snowstorms in
, but some factories were able to make up the losses with
longer work hours and extended shifts. Several manufacturers in the
Philadelphia District said production gains could be limited due to
continued tightening in credit markets and adverse developments in
taxes and regulations. Plant managers in a few Districts reported that
a large number of customers were simply restocking inventories, leading
to concerns about the sustainability of the increase. However, contacts
in most Districts remained optimistic for future months, with several
reports of planned increases in capital spending.

Real Estate and Construction
Residential real estate markets improved in a number of Districts,
remained weak or softened further in the New York, Atlanta, and Chicago
Districts, was little changed in the San Francisco District, and
characterized as mixed in the St. Louis District. Richmond also
reported overall housing activity as mixed, but one contact noted that
absent the harsh weather, market conditions might have improved.
Adverse weather conditions also hampered home sales and construction in
the New York, Philadelphia, and Atlanta Districts. Most Districts
attributed stronger home sales to the home-buyer tax credit, with
several contacts apprehensive about future sales once the credit
expires on April 30. Philadelphia, Cleveland, Kansas City, and Dallas
reported that sales were strongest for low-priced and starter homes,
while Dallas cited financing difficulties for high-end homes. Home
construction was down or stagnant in most Districts, with the exception
of the Minneapolis, Kansas City, and Dallas Districts. Atlanta said the
most pronounced weakness was among Georgia homebuilders, and San
Francisco attributed weak construction activity to elevated home
inventory levels. Home prices mostly remained flat or declined
slightly, but signs of improvement were noted in the Boston and San
Francisco Districts. A real estate agent in a relatively upscale area
of the New York District said prices have continued to drift downward
but that short sales were relatively rare and most transactions were
still above the mortgage balance.

Commercial real estate conditions remained weak or declined further
in most Districts, although some Districts noted slight stabilization
or modest signs of improvement. Commercial real estate activity
weakened in the Richmond, Minneapolis, Kansas City, Dallas, and San
Francisco Districts, though Dallas noted that leasing fell at a slower
rate and San Francisco cited increased leasing in some segments. Boston
and Philadelphia said conditions remain weak, but both noted some
improvement in sales of commercial space. New York reported softer
activity in the New York City area but some steadying in vacancies and
rents elsewhere, while St. Louis said activity remained weak throughout
the District. Several Districts also noted that many tenants were
pushing for, and in some cases receiving, concessions on rents. All
Districts reporting on commercial construction said that activity
remained weak or slow, except for some moderate boost from federal
stimulus projects and other public construction. Credit for commercial
development and transactions was still very difficult to obtain in
several Districts, though San Francisco noted a slight improvement in
financing availability.

Banking and Finance
Loan demand remained weak across the country. New York, Cleveland, and
Kansas City reported decreased demand for most types of loans. Other
Districts said loan demand was unchanged but soft. Richmond and Chicago
noted that the weak economic outlook was holding back loan demand, and
San Francisco said caution about hiring and spending plans was keeping
businesses from seeking credit. However, Philadelphia and Richmond
reported banks were receiving more inquiries from businesses about
loans, and Dallas said contacts were hopeful that loan demand would
pick up by the end of the year.

Districts indicated that banks remained cautious about lending. New
York, St. Louis, and Kansas City reported somewhat tighter credit
standards on commercial real estate loans, and New York noted tighter
standards for commercial and industrial loans. In other Districts,
credit standards were little changed but remained tight. Atlanta
reported that banks had ample liquidity but were reluctant to reduce
cash reserves. Chicago said a leveling in asset quality was causing
large banks to become more interested in lending to prime borrowers,
but strained balance sheets were holding back lending by mid-size
banks. In the Dallas District, smaller banks reported that regulatory
requirements were limiting their ability to expand real estate lending.
Loan quality remained a concern but showed signs of stabilizing in some
Districts. New York, Dallas, and San Francisco cited further declines
in loan quality. In addition, banks in the Philadelphia and Kansas City
Districts were reported to be slightly less pessimistic about future
loan quality than in the previous survey.

Agriculture and Natural Resources
Harsh winter weather continued to dampen overall agricultural activity,
although crop conditions were still generally favorable in most
Districts. Minneapolis, Kansas City, and Dallas reported that livestock
were stressed by severe weather and that producers provided
supplemental feed due to poor grazing conditions. Atlanta commented
that cold temperatures caused minor freeze damage to vegetable and
citrus crops. Despite below-average temperatures, Kansas City reported
the winter wheat crop was in generally good condition. Dallas and San
Francisco said that heavy rains and snowfall improved soil moisture
this year's crop production, though some contacts were concerned that
spring planting could be delayed if fields remain too wet. Crop prices
edged down following the bumper fall harvest, but Chicago noted that
high-quality grain was selling at a premium, due in part to strong
export demand. Hog and cattle prices strengthened and dairy prices were
flat. Kansas City noted stronger farm incomes from crop production,
while agricultural lenders in the Minneapolis District expected farm
income and spending to decrease.

Energy activity generally strengthened since the last survey period.
Kansas City and Dallas reported increased drilling activity, especially
for natural gas, and Cleveland noted increased natural gas-related
investment. However, producers in the Kansas City District were
concerned that a boost in supply from shale gas production could lower
natural gas prices later in the year. Minneapolis reported that oil
exploration expanded in February, while oil production was stable in
the Atlanta and San Francisco Districts. Coal production in the
Cleveland and Kansas City Districts remained below year-ago levels.
Minneapolis reported brisk activity in metal mining and continued
energy construction.

Employment, Wages, and Prices
The pace of layoffs slowed in most Districts, but hiring plans still
remained generally soft. New York cited a slowdown in layoffs at a
securities firm and noted a pickup in hiring in what was still
characterized as an exceptionally weak legal industry. Staffing firms
in the Boston District also saw a strengthening in demand, particularly
from the financial and manufacturing sectors. Several manufacturing and
construction firms in the Cleveland District began recalling workers,
and temporary staffing accelerated in the Richmond, Atlanta, and
Chicago Districts. However, Chicago said demand for permanent workers
was low, and a manufacturing contact in the Richmond District held back
employment due to productivity improvements. Layoffs were also reported
at several retail and manufacturing firms in the Dallas District, and
Minneapolis said companies in the medical insurance and financial
services industries reduced employment. Wage pressures were minimal,
but Boston and Cleveland noted a lift in salary freezes and Richmond
said wages rose at service and retail businesses.

The majority of Districts reported limited price pressures,
although several noted rising input costs due to higher commodities
prices. Boston, Cleveland, Chicago, and Dallas noted an increase in
metals prices, particularly steel, and Chicago and Kansas City said the
upward pressure on some raw materials prices was likely to continue.
Lumber prices rose in the Cleveland and Richmond Districts due in large
part to weather-related supply issues. On the other hand, San Francisco
reported commodity prices were stable or down, with declines in natural
gas, copper, and aluminum prices. Some contacts in the Boston District
said customers sought fewer price concessions from vendors in order to
better ensure reliable deliveries. But nearly all Districts reported
limited pricing power, with many firms unable to increase selling
prices due to competitive pressure. Retail prices were stable in most
Districts, although San Francisco noted heavy discounting. Districts
generally expected stable prices overall heading forward.

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faustian bargain's picture

Ah, the old snow job.

faustian bargain's picture

I mean, you know, who could've guessed there would be snow! February! ...

Anonymous's picture

Add to the 6 references to snow:

harsh weather (2)
harsh winter weather
severe weather (2)
extreme winter weather
due to weather
adverse weather conditions


mynhair's picture

U forgot the 'poor weather' one.

rubearish10's picture

I don't think I've ever heard weather being such an excuse. This could only mean things are even worst than imaginable. BTW, what will they say if UE number is positive on Friday?? Oh, if it weren't for the weather there would be even more jobs, that's right.

Fritz's picture

Who is left to even believe that any of this wordsmithing even remotely collides with reality?

rubearish10's picture

So, nobody ever thought banks would use excess reserves to lock in profits through trading vs lending? WOW!

lizzy36's picture

Leisman just told me all good.   And pisani told me what the "important thing is" (alas, can't remember it). 

Maybe ZH should have a poll on what the excuse for lousy may/june numbers will be? Excess tulips?

Bam_Man's picture

No, in June it will be "an unexpected heat wave".

SteveNYC's picture

I'd love to see the entire CNBC crew (except Santelli) held accountable for their pathetic cheerleading. They really indoctrinate them well at good ol' GE. Die, large corporation, die!

Cognitive Dissonance's picture

Other than shouting "Fire" in a crowded theater, everything else uttered by the talking heads at CNBC comes under the "opinion" category. Since you can't slander or libel the economy, it's all clear at CNBC.

carbonmutant's picture

CNBC would not mention FIRE in a crowded theatre. They been told their job is not to panic the patrons but to provide color commentary on the performance.

Pladizow's picture

CNBC Commentatrors are simply overpaid actors who dare not stray from their assigned script - for fear of being replaced.

Where did this CNBC british guy come from, what about Dylan Ratigan or the other guy who recently took a year long hiatus.

Where's Charlie Gasparino?


Unscarred's picture

Excess tulips...  Brilliant Lizzy!

Mr Lennon Hendrix's picture

I love reading the biege book.  "The List of Lies!"

Thanks ZH.

masterinchancery's picture

You can't make this stuff up--snow in midwinter as the culprit!

Fritz's picture

And Goldman/Morgan ramps the market in ...3...2...1

Farcical Aquatic Ceremony's picture

These are the kind of guys who would **** your wife from behind, and if you walked into the room and caught them, would turn to you mid-act and say, "You're welcome."

Hondo's picture

There is nothing scientific about the BB.  It just a group of business people sitting around the various Fed Regional banks dining room talking about their industry, company, etc.  There is no accuracy to it....more of a propoganda tool than real information.......

jc125d's picture

Well since it probably won't happen that March brings RECORD SNOWSTORMS here is next month's report in advance:

Yep, yep, yep. It's all G-double O-D, good, good, good.
Yep, yep, yep. It's all G-double O-D, good with me, with me, with me.


Anonymous's picture

nice Bone Thugs reference

Cow's picture

"A real estate agent in a relatively upscale area of the New York District said prices have continued to drift downward but that short sales were relatively rare and most transactions were still above the mortgage balance."

The Fed employs thousands of people and this anecdote is the best they can do for data?


Hondo's picture

Of course they don't tell you what the sample size was (one guy....his aunt) and they don't tell that anything they come up with in these regional meeting is absolutely worthless and meaningless on any basis you want to look at it.  The sampling is one guy at lunch the day they hold the BB meeting.

Bob's picture

The wonder of unlimited degrees of freedom from the pulpit. 

Anonymous's picture

Well, at least they aren't yet reduced to quoting Page-6.

Anonymous's picture

So... if for example there are 1,000,000 jobs yet it only takes 500,000 to do the same amount of work (given economic standings) effectively there are too many employed.

Jobs start getting cut:
Month 1 cuts 100,000 total employed 900,000
Month 2 cuts 100,000 total employed 800,000
Month 3 cuts 100,000 total employed 700,000
Month 4 cuts 100,000 total employed 600,000
Month 5 cuts 60,000 total employed 540,000
"hey... job cuts slowed"
Month 6 cuts 40,000 total employed 500,000
"hey... jobs cuts have slowed"

Have they slowed or did we just get to the number given the economic standing?

Media spin... unemployment is slowing for two consecutive months. CNBC - buy, buy, buy the market.

Watch out for the unemployment spin.

mtomato2's picture

I have best heard this described as "The rate of bleeding slows dramatically when the body becomes a corpse..."

AR15AU's picture

Cuba is truly blessed....  without the accursed economic shackles of snowfall, their economy is free to exand ad infinitum. 

besodemuerte's picture

Sorry JP Morgan I couldn't pay my mortgage, too much snow this month.

BlackBeard's picture

The snow ate my homework.

lsbumblebee's picture

"Warmer temperatures will occur over the lower Mississippi Valley and southern Plains. After a rather long spell of below average temperatures and even some snow, the Southeast will see ample sunshine and much milder temperatures from Friday through the coming weekend. The door is open for more storms to impact the West Coast through the upcoming weekend. A weakening storm will slide through the Great Basin and interior Northwest over the next 24 hours. Rain and mountain snow will fall from central Washington southeast through Idaho, extreme western Montana, extreme western Wyoming and Utah."

jmc8888's picture

Who knew our economy worked fine until a few snowstorms.  Do they ever happen in februrary?  I thought they only happened in Winter...and februrary is in...oh yeah...winter.

Winter happens every year. Twice actually if you think globally.


I guess they take the snow as an event that is not calculated in their wonderful statistical models that account for everything (err nothing).



Joe Sixpack's picture


The abstracted economy is improving (i.e., in theory). The real one is in dire straits.



In theory derivatives are useful tools for risk management. In reality they have collapsed the current financial system.

MinnesotaNice's picture

We have now made it full circle... from green shoots to snowstorms.  Based on this Beige Book it is clearly a miracle that we have any economic activity at all in Minnesota in the winter... since snow is our life.  Someone needs to review the Beige Book reflecting February 2004 and see how many times snow is mentioned... that would be an interesting comparison... and likely offer the most authentic information on how much of what we are currently being fed is spin... albeit a snowy spin.

MinnesotaNice's picture

Beige Book March 2004 (reflecting Jan/Feb) had only 2 mentions of the word snow... and one of those mentions was the 'bountiful snowfalls gave a boost to ski resorts' and 'snow limited grazing in the Richmond District'... mmmm... seems as if snow is being used a bit excessively in 2010... perhaps it is time to short 'snow'.

Bam_Man's picture

Everybody knows that nothing gets done in MN during the winter. Except for icefishing and snowmobiling that is.

Anonymous's picture

We want lower interest rates. Negative rates for all, now!!
In case there's rain tomorrow.

BlackBeard's picture

What do you get when you combine a economist with a weatherman?

bugs_'s picture

A Sunshine Liquidity Trap?

crosey's picture

Don't eat that yellow snow!

Anonymous's picture


The sales of shovels was extraordinarily strong in the DC area, with the unexpected February snowstorm and the expected BS out of washington politicians mouths.

bugs_'s picture

Global Snowing!

Anonymous's picture

Greatest country in the world.

Anonymous's picture and is where I get my news - and it aint looking good.

curbyourrisk's picture

"But nearly all Districts reported limited pricing power, with many firms unable to increase selling prices due to competitive pressure. Retail prices were stable in most Districts, although San Francisco noted heavy discounting."