On Wednesday, the latest Beige Book, an anecdotal view of the economy in the central bank's 12 U.S. districts, described a troubled economic landscape, but one that is thawing.
According to the report, which covered the last six weeks until April 6, the Fed's banks saw overall economic activity contracted further or remained weak. However, five of the twelve districts noted a moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level.
Everything is relative though, and the bar was set low for Wednesday's report. The prior report, which was released in early-March, indicated the U.S. economy won't be recovering from its subprime blues much before the end of this year. (See "Beige Book Paints It Bleak.") According to that report, 10 of the 12 reports demonstrated weakening conditions or declines in economic activity in the six weeks through late February.
Despite stronger headline from Wednesday's report, the contents were essentially an echo of previous releases. Credit remains tight, manufacturing weakened, retail spending remains sluggish, while home prices continue to fall and commercial real estate market deteriorates due to dropping demand for office, industrial and retail space.
The Beige Book traditionally isn't a market mover, and Wednesday's release proved no different, despite its warming overtones. The market shouldn't have been too surprised though with the brighter commentary. On Tuesday Fed chairman Ben Bernanke said he saw "tentative signs" of economic improvement.