Fed report: Recovery steady, but modest

By Hibah Yousuf, staff reporter


NEW YORK (CNNMoney.com) -- The economy showed continued signs of modest improvement in recent months, the Federal Reserve said Wednesday in its latest snapshot of regional economic conditions.

Economic activity increased or held steady in 10 of the central bank's 12 districts, according to the July edition of the Fed's so-called Beige Book report. The exceptions were Atlanta and Chicago, which reported slowdowns.

"The stabilization of the economy continues," said Doug Roberts, chief investment strategist for Channel Capital Research. "But there's nothing major in terms of improvement, especially if you look at the underlying structural problems in the labor market and housing."

Districts noted better conditions in the services sector, with increases in the freight transportation industry and at consulting firms.

The Fed said most of the districts also welcomed a rise in manufacturing activity, though the pace slowed or leveled off in half of the districts.

Retail sales were a bright spot, suggesting a continued rise in consumer spending. Several districts said that necessities like clothes and food continued to be strong sellers, while big-ticket items moved more slowly. The report showed auto sales fell during the period since the last report in early June.

Housing slump: The Fed said the housing market lost steam following the April 30 expiration of the homebuyer tax credit, and most districts expect construction and home sales to remain limited. The commercial real estate market also remained weak across country.

While the government incentive helped drive down the housing market's excess supply, Roberts said it wasn't enough to spur a real recovery.

"The tax credit was like a painkiller for the housing market, but we'll have to go into surgery to deal with the underlying problems," Roberts said.

Temporary jobs on the rise: Most districts said the overall labor market gradually improved during the early summer months, citing an increase in temporary hiring.

Boston and Dallas, however, said the job market held steady. Gains in Dallas were offset by significant layoffs in the energy sector due to the deepwater drilling moratorium following the BP oil spill in the Gulf of Mexico.

"Temporary hiring doesn't set the basis for a more robust recovery," Roberts said. "It allows the conditions to stabilize a bit, and as long as there's some stimulus, you'll get a muted recovery, but there might not be much after that."  To top of page

Frontline troops push for solar energy
The U.S. Marines are testing renewable energy technologies like solar to reduce costs and casualties associated with fossil fuels. Play
25 Best Places to find rich singles
Looking for Mr. or Ms. Moneybags? Hunt down the perfect mate in these wealthy cities, which are brimming with unattached professionals. More
Fun festivals: Twins to mustard to pirates!
You'll see double in Twinsburg, Ohio, and Ketchup lovers should beware in Middleton, WI. Here's some of the best and strangest town festivals. Play
Index Last Change % Change
Dow 16,912.11 -70.48 -0.42%
Nasdaq 4,442.70 0.00 0.00%
S&P 500 1,969.95 -8.96 -0.45%
Treasuries 2.46 -0.03 -1.16%
Data as of 3:43am ET
Company Price Change % Change
Frontier Communicati... 6.79 0.85 14.31%
Windstream Holdings ... 11.83 1.30 12.35%
AT&T Inc 36.59 0.94 2.64%
CenturyLink Inc 39.90 2.19 5.81%
Bank of America Corp... 15.34 -0.16 -1.03%
Data as of Jul 29

Sections

McDonald's in Japan says profit and sales will fall short of expected targets this year, as fallout widens over a major food safety scandal. More

Amgen is the latest to continue corporate America's cost cutting strategy, even as the economy is supposedly on the mend More

Bunch o Balloons allows multiple water balloons to be filled at once. Parents are loving it -- to the tune of $645,000. More

Steve Mason, a pastor from California, inherited more than $100,000 in student loan debt when his 27-year-old daughter died suddenly in 2009. With interest and late penalties, the debt has since ballooned to $200,000. More

Market indexes are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer Morningstar: © 2014 Morningstar, Inc. All Rights Reserved. Disclaimer The Dow Jones IndexesSM are proprietary to and distributed by Dow Jones & Company, Inc. and have been licensed for use. All content of the Dow Jones IndexesSM © 2014 is proprietary to Dow Jones & Company, Inc. Chicago Mercantile Association. The market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. FactSet Research Systems Inc. 2014. All rights reserved. Most stock quote data provided by BATS.