The Federal Reserve recently released the latest edition of its Beige Book, an anecdotal look at the United States economy published every other month based on interviews of business contacts, economists, market observers and so on. Given our current economy, this publication is aptly named.
Beige is an elusive color. In an article published on thekeystocolor.com website, it was noted: “Beige is a problematic color for walls in that no two people will agree on exactly what it is. It can be the most docile of neutrals and it can be as insipid as a flesh tone.” The descriptive terms here — problematic, docile and insipid — actually fit our economy as well, an economy that has suffered through one of the worst economic recovery and expansion periods on record.
In the latest Fed Beige Book, we read basically more of the same about uninspiring growth. It was summed up: “Reports from the 12 Federal Reserve Districts suggest that national economic activity continued to expand at a modest pace on balance during the reporting period of July through late August. Most districts reported a modest or moderate pace of overall growth. However, Kansas City and New York reported no change in activity, and Philadelphia and Richmond noted that, while still expanding, activity slowed from the previous period. Contacts across the 12 districts generally expect moderate economic growth in coming months.”
Other bits of recent economic data and information hardly pointed to anything more. For example, the latest on the service sector of our economy was troubling. The Institute for Supply Management reported its non-manufacturing index fell to 51.4 percent in August from 55.5 percent in July. Readings over 50 percent signal that more businesses are expanding instead of contracting, but it was the weakest showing since February 2010, shortly after the end of the Great Recession.
And ISM also reported the manufacturing index moved into contraction territory. Its manufacturing index fell to 49.4 percent in August from 52.6 percent in July, below the consensus expectation for a 52 percent reading. Any reading below 50 percent indicates contraction, and the index was below that level for the first time since February.
This lines up with concerns the industrial sector continues to suffer through a recession that actually began in late 2014.
For good measure, the August jobs report pointed to lackluster employment growth as measured by both the establishment and household surveys.
Just as people can’t agree on the color beige, there are many different views on the economy. Some see positives, others negatives. In the end, the economy continues to suffer through a period easily classified as problematic, docile and insipid. It’s the beige economy.