According to the Federal Reserve’s Beige Book, the US economy continued to grow at a moderate pace over the last two months, with only one of the 12 districts reporting a slower pace of growth.  Economists had expected a report that would show more signs of a weakening economy and lost momentum, so the Beige Book was a bit of a bullish surprise.

 Activity in the New York, Cleveland, Atlanta, Chicago, Kansas City, Dallas, and San Francisco Districts was characterized as growing at a moderate pace, while the Richmond, St. Louis, and Minneapolis Districts noted  modest growth. Boston reported steady growth, and the Philadelphia District indicated that the pace of expansion had slowed slightly since the previous Beige Book.

According to the report, manufacturing continued its expansion in most districts, while consumer spending was unchanged or up slightly.  The residential and commercial real estate markets also improved, as construction picked up in many areas of the country. As was not rosy though:

“Economic outlooks remain positive, but contacts were slightly more guarded in their optimism,” the report said.

Contacts in a number of Fed districts were concerned that a slowdown in Europe and added that “domestic political uncertainty” may affect future business conditions, the Beige Book found. – MarketWatch

The report indicated that hiring was steady and for the most part unchanged. The bright spots were in construction, manufacturing, and information technology.

All in all, the markets digested the better-than-expected news, but didn’t react much to the report. The markets are unchanged from when the report was released. It seems that the move down in equities  has never been about frailness in the US , but rather about the crisis in Europe and its perceived affect on the world. We’ll see how much of the worst-case scenario comes to fruition.

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