Economy Watch: Fed Says Growth at “Measured Pace”

By Dees Stribling, Contributing Editor

On Wednesday, the Federal Reserve released the latest Beige Book—the “Summary of Commentary on Current Economic Conditions by Federal Reserve District,” to use its formal name—and for the moment, the central bank isn’t characterizing the U.S. economic as experiencing “moderate” or “modest” growth. Instead, “economic activity expanded at a measured pace in recent weeks,” the Fed said, its reputation for opaqueness still intact.

Most of the Fed’s 12 districts reported a “somewhat stronger” increase in activity. But not everywhere: Weaker conditions in New York were attributed to widespread disruptions at the end of October and into November caused by Hurricane Sandy. Philadelphia likewise reported a generalized weakness that was exacerbated by the storm.

Construction and CRE activity generally improved across districts since the last report, the book noted. Philadelphia, Richmond, Chicago and Minneapolis report gains, albeit modest ones. As for residential real estate, markets for single-family homes continued to improve across most districts, with the exception of Boston and Philadelphia. Residential real estate markets in the New York District were mixed but generally firm before the storm.

New home sales down slightly

The Census Bureau reported on Wednesday that new home sales took a small monthly dip. Sales were at an annualized rate of 368,000 in October, down 0.3 percent compared with 369,000 in September. Compared with the same month in 2011, however, new home sales were up 17.2 percent.

The bureau also said that its estimate of new houses for sale at the end of October—the new housing inventory, in other words—was 147,000. That represents a supply of 4.8 months at the current sales rate, which puts the inventory back into the “normal” range, normal being below six months.

The median sales price also dropped last month, from $248,000 in September to $237,700 in October, the bureau estimates. But generally speaking, prices are still on an upward trajectory. The October 2012 median sales price was up 5.7 percent from a year earlier.

Wall Street gyrated a lot on Wednesday, but ended as a strong up day, perhaps on whispers that a fiscal cliff deal is just about done (though such rumors, and opposite rumors as well, are a dime a dozen in Washington these days). In any case, the Dow Jones Industrial Average was up 106.98 points, or 0.83 percent, while the S&P 500 and the Nasdaq gained 0.79 percent and 0.81 percent, respectively.