Beige Book shows recession easing, conditions stabilizing

The Fed's Beige Book is a summary of economic conditions in each of the twelve districts that make up the Federal Reserve and is based on comments from businesses and other contacts outside the central bank.

The report suggests that economic activity continued to be weak going into the summer. But most districts indicated that the pace of decline has moderated since the last release or that activity has begun to stabilize, which corresponds with remarks from many multinationals that point to stability heading into the second half of 2008.

Manufacturing remained "subdued" but was slightly more positive than in the previous Beige Book. Comments varied but on the whole they appear consistent with a forecast of modest and uneven recovery in manufacturing output beginning during roughly the coming six to twelve months.

The labor market remains weak, which has "virtually eliminated upward wage pressure." Wages and compensation are holding steady or falling in most districts. Upward price pressure was "minimal," the Fed's report noted.

In the meantime, residential real estate markets is still weak, but many districts reported signs of improvement. The Minneapolis and San Francisco regions cited large increases in home sales compared with 2008 levels, and other districts reported rising sales in some sub-markets.

Commercial real estate leasing, however, was described as either "weak" or "slow" in all 12 Districts, although the severity of the downturn varied somewhat across Districts.

Separately, a look at the difficult decisions Fed Chairman Ben Bernanke must grapple with over the next year are highlighted at Examiner.com.