Report Finds U.S. Economy Slumping

December 3, 2008 6:13 p.m. EST

Washington, D.C (AHN) - The Federal Reserve's latest beige book report painted a bleak outlook for the U.S. economy as business conditions weakened in all 12 districts since the last report on October 15.

The report could be a precursor to what may be a weak holiday market for retailers and the like.

The Fed reported weakness in consumer spending across all districts as retail sales continued to soften. Many district reports showed retailers were preparing for a slow holiday sales season.

Kansas City reported a sharp decline in consumer spending while Boston bucked the trend somewhat, reporting mixed results.

Several districts said sales of big-ticket items such as furniture and appliances fell recently. On the flipside, discount stores reported stronger sales volumes in some districts.

Real estate remained sluggish in many districts with housing prices falling in nine of the Federal districts. Inventory levels of unsold homes remained high overall, but did decline in Chicago, Minneapolis and Philadelphia.

Commercial real estate fared a bit worse as vacancy rates rose in many districts. Commercial building activity declined in many districts as well.

Labor markets weakened on a whole as several districts saw demand for temporary staff drop and seasonal hiring slow. Atlanta reported acceleration in layoffs and reduction in hours while San Francisco saw job cut and hiring freezes across several industries.

With the weakening labor market, wage pressures were basically subdued. Richmond even reported a decline in wages for the retail sector.

Pricing pressures have continued to ease as the price of commodities has dropped. Many districts reported selling prices leveling off while prices paid have decelerated.

The Federal Reserve's latest beige book contains reports from 12 economic districts as of Nov 24. Reports are derived from business surveys within each district.