Freight companies continued to report lackluster domestic demand, and several regional trucking companies have cut back operations, the Federal Reserve’s Beige Book revealed Wednesday, March 5. Economic activity was slowed by a sinking housing market and shrinking retail sales in January and early February, the report stated.
Homebuilders and Realtors reported new and existing home sales remained well below year-ago levels during January and early February. Residential construction was below year-ago levels, but most homebuilders noted inventories were trending lower gradually. Many Realtors said the inventory of existing homes for sale continued to rise despite modest declines in asking prices, and they said the traditionally strong spring-selling season will be crucial in determining the year’s performance.
Banking industry contacts reported mortgage delinquencies and foreclosures were higher, but several noted borrowers had become more active in working with banks on immediate and anticipated credit problems. Demand for skilled workers remained strong in several industries, including health care, business and technical services, but several firms linked to residential construction and sales reported reduced hours and increased layoffs.
Commercial development during January and early February was flat to slightly down, and most contacts expected a further decline in activity over the next several months. Most merchants said retail sales were weak during January and early February, citing a moderate decline in sales compared with a year ago. Several noted inventories were higher than expected and said they planned to scale back orders. However, the outlook among retailers generally was positive, with the majority expecting better sales over the next several months.
The Beige Book summarizes anecdotal comments received from businesses and other contacts outside the Federal Reserve. The document is not a commentary on the views of Federal Reserve officials.