Beige book reports modest growth, prosperous spring

The beginning of 2008 yielded mixed economic results across the nation. Tourism, agriculture and energy propelled regional economies, but a nationwide softening in the job market has fueled some concerns for the upcoming quarter. Here are some of the specific findings from the Beige Book, by district: District 1, Boston: Economic experts in New England report mixed results and plan to approach 2008 with uncertainty. Retailers cite strong sales in apparel, accessories, electronics and sporting goods, while so-called "big-ticket" items and home goods did not fare as well. The housing market is sluggish in the region's major metropolitan areas, but office space is holding steady. District 2, New York: The empire state and its surrounding area recovered from a slower year-end with positive business results in January and February. N.Y.C. bucks the national trend with 5% increase in home prices; in addition, Broadway attendance was up 4%. Across the region, bankers report weakening loan demand, aggravated by tightening credit standards and a receding residential real estate market, palpable everywhere but N.Y.C. District 3, Philadelphia: Sources in the third district are cautiously optimistic, as moderate wage gains may counterbalance hiring freezes. Retail sales remained relatively flat over this time last year, and real estate agents express hope that the housing market will begin to stabilize, despite tightening credit standards. District 4, Cleveland: The Midwest boasts modest growth, particularly in energy, aerospace and defense industries. Housing contractors are moving into the comparatively stronger commercial market, while the residential sector shows signs of improvement. Bankers report a decline in credit quality. District 5, Richmond: The district has lost some momentum from the previous report, and drought conditions threaten sales of lawn and garden items. Still, buyers are going to the stores, and home sales around Wash., D.C. are solid. Overall, however, manufacturing has slowed while the housing market tries to pick up. District 6, Atlanta: The job market is exhibiting first signs of softening, specifically in service and auto jobs. Demand for skilled workers in health care, business and technical services is still high. Although consumer spending is down, tourism is strong and shows no signs of slowing down. Residential real estate is still weak, but discounting by homebuilders has helped move some inventory. District 7, Chicago: Expansion in the district is evident, due in part to favorable employment conditions and heightened manufacturing output. Consumer spending slowed, potentially due to higher energy prices and a deteriorating credit market. Business spending is little changed, and residential construction has dropped. District 8, St. Louis: Characterizing the nationwide trend, the district is struggling through a particularly bleak housing market. Predictions of an increase in manufacturing activity were realized over the last two months, and the lackluster housing sector appears to have no effect. Retail and auto sales were lower than expected. District 9, Minneapolis: The district is plagued by decreased residential construction activity as well as a beleaguered housing market. While consumer spending is slightly lower, the services sector is boosted by a strong tourist season. Snowmobiling and cross-country skiing activity has picked up in January and February. District 10, Kansas City: Experts reported more moderate growth, and commercial real estate is faring much better than its residential counterpart, although some real estate agents boast confidence. Travel and tourism activity was positive; bankers report weaker loan demand and tighter credit standards. District 11, Dallas: Retail sales rebounded in February, giving economists hope for impending prosperity. While costs for metals, shipping and energy are on the rise, manufacturers are not experiencing any negative ramifications. Service firms saw a pick-up in demand, but other sectors are implementing hiring freezes. District 12, San Francisco: The west coast's economic expansion was propelled by agricultural output, manufacturing and wages. Price increases occurred across the board, particularly in food and energy. The declining housing market continues to stunt expansion, but the strength on the commercial side is noteworthy. As we enter the season of spring shopping, there is much reason for cautious optimism. The power of the consumers has never been more evident, as their confidence can rapidly shift a region's economic landscape. Here's to shoppers opening their wallets this spring! Faith Hope Consolo is the chairman of Prudential Douglas Elliman's Retail Leasing and Sales Division, New York, N.Y.