Reports from the Federal Reserve Banks indicate that 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.
Manufacturing activity weakened across a broad range of industries in most Districts,
with only a few exceptions. Nonfinancial service activity continued to contract across Districts.
Retail spending remained sluggish, although some Districts noted a slight improvement in sales
compared with the previous reporting period. Residential real estate markets continued to be
weak. Home prices and construction were still falling in most areas, but better-than-expected
buyer traffic led to a scattered pickup in sales in a number of Districts. Nonresidential real estate
conditions continued to deteriorate. Difficulty obtaining commercial real estate financing was
constraining construction and investment activity. Spending on business travel declined as
corporations cut back. Reports on tourism were mixed. Bankers reported tight credit conditions,
rising delinquencies, and some deterioration of loan quality.
Agricultural conditions were generally favorable across Districts, although drought
conditions persisted in the Dallas and San Francisco Districts. The Districts reporting on energy
said reduced demand, high inventories, and lower prices led to steep cutbacks in oil and natural
gas drilling and production activity. The Minneapolis, Kansas City, and Dallas Districts noted
declines in employment in the oil and gas extraction industry.
Downward pressure on prices was reported across Districts. Wage and salary pressures
eased as labor markets weakened in all Districts, and many contacts continued to report job cuts
and wage and hiring freezes. Employment continued to decline across a range of industries, with
only scattered reports of hiring.