Summary:

• Improvements seen in semiconductors, entry-level housing and, of course, autos
• IT services, health care/pharma, aerospace and discount stores remain solid
• Anything to do with finance, commercial and residential construction and high-end products remain weak

A LIGHTER SHADE OF BEIGE

The Fed’s Beige Book is a wonderful collection of real-time anecdotes and insights regarding the Fed districts’ assessment of the economy and financial markets. In particular, we have long used the report as a vehicle to isolate sector shifts.

Sectors that were WEAK but are now IMPROVING:
• Tourism
• Staffing firms
• Railroads (over trucking and air freight)
• Small parcel service firms
• Automotive (cash for clunkers)
• Paper products/containerboard
• Chemical manufacturing
• Semiconductors
• Entry-level housing
• Grocery chains
• Apparel retailing (youth)

Sectors that are SOLID and remain SOLID:
• IT Services
• Health Services
• Pharma
• Aerospace
• Discount stores
• Public construction (roads)
• Food manufacturing

Sectors that were SOLID but are now WEAKENING:
• Tobacco
• Oil and gas drilling

Sectors that remain WEAK:
• Financial services
• Commercial construction
• Luxury goods retailers
• Appliance manufacturers
• Home and garden centers
• High-end real estate
• Multi-family housing
• Commercial real estate
• Coal mining producers
• Electric utilities
• Heavy trucks
• Restaurants