According to the Federal Reserve Board (FRB) Summary of Commentary on Current Economic Conditions (“Beige Book”*), economic activity in the Chicago-based 7th District continued to expand at a slow pace through the end of 2012; the full report is available on the FRB website.
Chicago District Beige Book Highlights (November/December 2012):
- Consumer spending increased led by strong apparel and jewelry sales; however, overall holiday sales were lower than expected, and auto sales lagged behind the national pace. For more information click here.
- Business spending was slow due to uncertainly related to federal fiscal policy. With the exception of seasonal hiring, planned employment growth was limited. Contacts reported demand in the Chicago-based district for technology, engineering, accounting and finance, energy, and skilled manufacturing talent. For more information click here.
- Construction and real estate activity was mixed; residential construction rose, but homebuilders predicted only moderate demand due to relatively low prices for existing homes. Contacts noted that non-residential demand continued to be weak as customers were waiting for clear resolutions on the potential “fiscal cliff” which could bring steep federal spending cuts and revenue increases. For more information click here.
- Growth in manufacturing was moderate, led by a strong auto industry and increased capacity utilization in steel, but weak to declining activity in the light metals, construction equipment, and energy sectors. For more information click here.
- Credit conditions continued to ease, in part due to a more predictable financial market. Banking contacts reported stronger demand for small business loans from manufacturing sectors such as machining and packaging. For more information click here.
- Cost pressures eased, with lower raw material prices (although there were concerns about food and energy price increases). Contacts reported higher healthcare costs, but some noted they were comparably less than last year. For more information click here.
- Agriculture – despite drought-induced low soil moisture and water levels, crop operations with insurance coverage reported increased net worth. Many farm-related capital expenditures (including land) were moved up into 2012 due to uncertainty around revisions to capital expediture taxes. For more information click here.