In the West, ‘weak’ retail sales, ‘dismal’ big-car sales

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The Federal Reserve just released its latest report on regional economic activity, the so-called beige book. The new report says data from the Fed’s 12 district banks ‘suggest that economic activity remained generally weak in late April and May.’

No surprise there, although it sounds less upbeat than Fed Chairman Ben S. Bernanke’s comments on Monday that ‘the risk that the economy has entered a substantial downturn appears to have diminished over the past month or so.’

You sure, Mr. Chairman?

Here are some of the report’s more interesting highlights of what was happening in the Fed’s Western region, which encompasses California as well as Alaska, Arizona, Hawaii, Idaho, Nevada, Oregon, Utah and Washington:

-- Overall, economic activity in the region ‘changed little’ during the survey period. ‘Upward price pressures were subdued for most products but remained severe for food and energy-intensive items.’

-- ‘Retail sales were weak and demand growth slowed for service providers. Manufacturing activity held steady or grew slightly on net, while producers of agricultural and natural resource products saw strong sales.’

-- ‘Demand remained very weak for new and used vehicles, especially for larger vehicles with low fuel efficiency, for which sales were described as ‘dismal.’ ‘

-- ‘Housing markets remained exceptionally weak despite scattered reports of improved sales.’ Demand for commercial real estate ‘continued to soften’ in some regions. ‘Contacts noting reduced leasing activity and lower sales prices for commercial properties in the San Francisco Bay Area and further increases in vacancy rates for commercial property in Las Vegas and San Diego.’

-- ‘The tourism industry saw mixed but somewhat weak performance on net. Hotel bookings and visitor spending were characterized as weaker or declining in Southern California and also in Hawaii, where recent airline bankruptcies reportedly have held down visitor counts; in contrast, hotel occupancy rates in parts of Alaska have been at record levels.’

-- In the aerospace business, ‘new orders have slowed for makers of commercial aircraft and parts, although production activity remained at high levels due to existing order backlogs.’

-- ‘Lenders continued to tighten credit standards, which remained especially strict for residential mortgages and construction loans. Credit quality eroded a bit further, mainly for loans related to the housing sector, with the most significant adverse impacts on asset portfolios noted for smaller community banks.’