• Consumer spending was “flat to moderately positive” in most Districts, while two noted declining traffic and sales. Retailers said consumer confidence is slowly returning, but noted that shoppers remain price-conscious and purchases were largely limited to necessities.
• Manufacturing activity continued to expand, with most Districts reporting gains in production or new orders across a wide range of industries. Two Districts, however, reported generally softer activity in the period.
• Housing markets continue to remain weak, with most Districts reporting sales below year-ago levels; however, prices generally held stable since the last report. Some concern was expressed by homebuilders regarding rising foreclosures and bank-owned homes coming to market. Commercial real estate activity “remained subdued” and respondents appeared to believe that the sector would remain weak for some time.
• Lending activity was reported to be “stable at low levels” across most districts. Credit quality was “changed little on balance” since the last report.
• With respect to labour markets, the report noted that the hiring “remained limited,” with firms reluctant to hire permanent workers given “economic softness.” As a result of these persistently weak labour market conditions, wage pressures “remained minimal,” with most Districts reporting “little evidence of wage increases in general.”
• Prices of final goods and services were stable across Districts despite input costs (particularly agricultural commodities and industrial metals) rising slightly.

Today’s Beige Book report provides anecdotal evidence of the “modest” pace of growth of the U.S. economy, and indicates that hiring “remained limited” and prices pressures subdued as “pass-through of rising input costs remained limited.” Against this backdrop, we not only expect that the current range for the Fed funds target will be maintained until late into 2011, but also that the Fed will engage in another round of assets purchases starting as soon as November in an effort to ensure that the recovery continues and inflation returns to levels that are consistent with the Fed’s mandate.