Beige Book: Recession Moderating

The recession is moderating, though growth will not occur in the second half

The June Beige Book confirmed what I have been saying for weeks: the pace of deterioration has slowed. Five districts said that the "downward trend is showing signs of moderating."

Counter-balancing this was the expectation that there will not be "a substantial increase in economic activity" throughout the remainder of the year. Again, this is inline what with the trends I'm drawing from the economic and earnings estimate revision data. Conditions are improving, but we are nowhere near to getting out the woods.

On the positive side, signs of improvement were noted in import and export activity, discount retail and lower-priced homes. Though this might sound like good news for Masco (MAS - Analyst Report) or Dryships (DRYS - Analyst Report), it's important to note that we're still far from a recovery in housing or transportation.

On the negative side, credit remained tight. Several districts blamed the lack of lending activity for depressing auto sales, which is problematic for Ford (F - Analyst Report) and other car makers.

Agriculture also had problems. Above-normal rainfall delayed planting in some districts, while drought hurt Oklahoma's wheat crop. Lower cattle and hog prices combined with higher feed costs were reported in some districts, which could adversely affect Sanderson Farms (SAFM - Snapshot Report) and its peers.