Beige Book Confirms Job Growth, Strong Holiday Spending

Manufacturing, healthcare industries also may be set for more job growth.

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A slew of recent data in the form of jobs numbers, retail spending, consumer confidence, and economic growth points to a slowly improving economy. The most recent Beige Book from the Federal Reserve confirms qualitatively what all of that quantitative information has suggested. However, it also shows that some recent encouraging figures might have been momentary blips. In addition, the report shows that economic improvement is uneven across different regions of the country.

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Published eight times per year, the Beige Book is a compilation of anecdotal information on current economic conditions from each of the 12 regional Federal Reserve Banks. The latest Beige Book notes that information from the 12 banks "on balance suggest[s] ongoing improvement in economic conditions in recent months, with most Districts highlighting more favorable conditions" than in reports from last spring and fall.

According to Doug Roberts, chief investment strategist for Channel Capital Research, businesses and the finance industry look to the report in part for evidence to support or refute recent economic data.

"You have statistics, now you see if the anecdotes match up to the statistics," he says.

To him, the most obvious area in which to note these matchups is with the most recent jobs report, which showed strong employment improvements, notably in healthcare, manufacturing, and transportation.

The Beige Book notes that manufacturing has been "generally continuing its steady overall expansion" nationwide, and that several districts have seen new construction and bank lending activity aimed at the healthcare industry. Likewise, broadly speaking, "Demand for shipping and transportation services generally expanded,"

However, while the most recent jobs report showed an uptick in construction employment, the Fed report seems to indicate that a generally anemic real estate and construction sector has been stagnant.

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The Beige Book also confirms that the holiday spending season was a success, as many retailers' figures suggested. "Most Districts reported that holiday retail sales were up noticeably over last year's season," says the latest Beige Book, with Dallas and New York noting strong bumps.

Consumer electronics, jewelry and other luxury goods are reported as being items that helped to drive holiday sales, which might help to bolster the Fed's recent data showing a surge in consumer credit.

Of course, with the anecdotal information coming from all corners of the country, there is some variation in how different Fed districts are faring. New York and Chicago described pickups in economic activity, while Dallas and San Francisco reported "moderate" growth. Meanwhile, all other districts reported only "modest" growth, save Richmond, which said that growth in its region "flattened or improved slightly."

Roberts says that this may point to particular strength in holiday tourism to cities like Chicago and New York, as well as a robust energy industry in the Dallas region and sustained health in the San Francisco district's tech industry.

While it is encouraging to see confirmations of economic growth—however slow—T.Dale, an advisor with Security Ballew Wealth Management in Jackson, Miss., says that it would be wrong to assume that the future will be as promising as the last quarter of 2011.

"The fourth quarter is now behind us, and the data looked reasonable," says Dale. "But I would not use that to extrapolate that forward to the entire year of 2012 to say that now we're on a sustainable trend."