(RTTNews) - While the news was not particularly surprising, the Federal Reserve's Beige Book said Wednesday that overall economic activity has weakened across all Federal Reserve Districts.
The Beige Book, a compilation of anecdotal evidence on economic conditions from each of the twelve Federal Reserve districts, noted that consumer spending has weakened, with the districts generally reporting decreases in sales.
Reports from the districts indicated that discount stores reported stronger sales volumes than department stores, suggesting that consumers were looking for cheaper goods.
Vehicle sales showed significant declines in most districts, according to the report, with sales of more expensive and less fuel-efficient vehicles particularly slow.
Additionally, the Beige Book said that reports on the service sector were generally negative, with most districts reporting a contraction in activity in the services sector since the last report.
Earlier in the day, the Institute for Supply Management released a report showing that activity in the service sector contracted by more than economists had expected in November, marking the second consecutive monthly contraction in the sector.
The ISM said that its index of activity in the service sector fell to 37.3 in November from 44.4 in October, with a reading below 50 indicating a contraction in the sector. Economists had been expecting a more modest decline to a reading of 42.0.
Anthony Nieves, chair of the ISM Non-Manufacturing Business Survey Committee said, "Respondents' comments reflect concern about the time line for the economy to stabilize and the impact it is having on discretionary spending and employment."
The Federal Reserve noted that manufacturing activity also declined noticeably since the last Beige Book report, with all twelve districts reporting weaker manufacturing conditions.
On Monday, the ISM released a separate report showing that activity in the manufacturing sector contracted at a faster than expected pace in November, with the index of activity in the sector falling to a twenty-six year low.
Nearly all districts reported weak housing markets, according to the Fed, with most districts also reporting weakness in the commercial real estate markets.
The Beige Book also indicated a contraction in lending, with many districts reporting reductions in residential, commercial and industrial lending and tightening lending standards.
With regard to the labor market, the Fed said that several district reports showed signs of slowing labor demand. The district reports generally described labor market conditions as weakening.
The Fed added that the district reports characterized price pressures as easing in light of decreases in retail and input prices, particularly for energy, fuel, and many raw materials and food products.
Generally released about two weeks before the next Federal Open Market Committee meeting, the Beige Book is used by the Fed to make its decision on interest rates.
The FOMC, the policy-setting arm of the Federal Reserve, is scheduled to hold a two-day meeting beginning December 15th. At its previous meeting, the FOMC cut rates by 50 basis points to four-year low of 1 percent.
Earlier this week, Federal Reserve chairman Ben Bernanke said that further interest rate cuts from already low levels were "certainly feasible," although he warned that the impact from any additional rate cuts would be "limited."
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