BeigeBookNovember - profit margins were declining There was...

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Worst Month of 2007 November 28, 2007 Manufacturing Production was steady over the previous six weeks. Compared with 2006, production has been declining, including auto manufacturers. Capital expenditures were on plan with the expectation of maintaining current spending levels. Contacts said that they had raised prices over the previous six weeks. Companies expected hiring in the future to be very slow. Real Estate New home sales declined since the October report. Sales were down from 2006. Home builders increased their discounting. Commercial construction was stable from October and up slightly compared with 2006. Companies expected a slow going into 2008. Consumer Spending General merchandise sales were flat to declining. Auto dealers reported a decline in new and used cars and anticipate a downward trend. Banking Demand for both business and consumer loans were declining since the October report. The home mortgage market remained sluggish. Most contacts reported that their
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Unformatted text preview: profit margins were declining. There was also a reported increase in delinquencies. Banks saw a decline in credit quality, namely on the consumer side. Bankers anticipated a continuing drop in loan demand and restrictive credit conditions. Energy Natural gas production declined while oil production increased. Prices for crude oil rose significantly. Contacts reported that material and equipment costs increased since October. Transportation Truck freight volume declined from October. Contacts reported that the shipment of construction supplies was particularly low. Outlook for 2008 is grim. Increasing fuel costs was an important issue to companies; they were not able to recover the entire amount of fuel costs through surcharges. There was a decrease in employment levels due to layoffs. Monetary Policy Recommendation The central bank should lower interest rates in order to help companies borrow and spur growth....
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