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Federal Reserve districts reported continued economic stabilization and, in some cases, modest improvement during a six-week period in September and October, according to the Federal Reserve Board's Beige Book.
Since the last report (Sept. 9), many districts continued to report weak or declining loan demand, and many noted further erosion of credit quality. New York, St. Louis and Kansas City reported stable or declining demand.
In Richmond, modest signs of improvement in consumer loans were cited from banks in areas typically supported by the health care and education industries. Philadelphia also reported a small gain in consumer lending. San Francisco reported that loan demand was "largely stable or perhaps rose slightly."
A bright spot in the banking sector was in lending to new homebuyers – a response to the federal government's first-time homebuyer tax credit, according to the report released today. Most districts cited the program as supporting residential lending activity. Dallas, however, reported that residential mortgage demand was "disappointing," and St. Louis reported a moderate decline in real estate lending.
Credit quality continued to be a problem, and the 12 districts often noted rising delinquencies. Philadelphia, Cleveland and Kansas City described credit quality as stable or declining. Delinquencies were widely reported to be up. New York noted rising delinquency rates for consumer and commercial mortgage loans.
Several districts characterized the labor market as weak or mixed, with occasional pockets of improvement. Employment activity was soft in Kansas City, and hiring remained limited in Boston. While a slowdown in layoffs was reported by Atlanta, no hiring was generally expected. Employment levels held steady in Dallas, with scattered reports of layoffs. Minneapolis reported a weak labor market, but some signs of improvement were noted among auto-related industries.
