Le Livre Beige

Earlier today, the Federal Reserve Board released its latest "Beige Book", a succinct and always interesting take on economic conditions in each of the Fed's 12 districts.

Unlike most economic reports the Beige Book is a more qualitative summary of economic conditions. Here is how the Fed describes how it's prepared:

"Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors and interviews with key business contacts, economists, market experts, and other sources." 

The research staff of the Boston Fed prepares the report for the first district -- which is defined as the entirety of New England except for Fairfield County in CT which is covered by the New York Fed.

The latest district 1 report contains a number of interesting observations, several of which bode well for the Commonwealth's near term economic prospects.  To wit,

Software and information technology contacts in the First District report that business conditions continued to improve. Year-over-year revenue increases ranged from mid-single digits to 15 percent in the most recent quarter. Half of contacted firms increased their headcounts and another was "on the cusp of hiring." One contact, however, reports a modest reduction in headcount due to restructuring. Wages are steady or up notably, with some merit increases in the range of 3 to 5 percent. Prices held steady and one contact observes less discounting pressure relative to a year ago. Half of contacted firms say that they have increased capital and technology spending relative to last year in order to expand or upgrade equipment; remaining contacts held capital and technology expenditures steady. The outlook among contacts is moderately positive.

This is good news for Massachusetts, where a large component of our export economy involves firms that develop, produce and sell information technology products and services to customers worldwide.  For a comprehensive examination of the role that the IT industry plays in the Massachusetts economy, see this relatively recent analysis.   

All that said, there are some sobering observations in this edition of the Beige Book as well.  Fed contacts report that residential and commercial real estate markets remain very weak and that non- technology sectors are only "slowly re-hiring " workers laid off during the recession.

Bottom line, it's a mixed bag but it definitely appears that it could be worse -- check out the national overview here