Fri, June 12, 2009
Boston Federal Reserve Bank: Few Signs of Recovery
The Federal Reserve Bank’s “Beige Book,” issued eight times a year, was released this week. The outlook for New England is uncertain, with few bright spots.
The report includes commentary on the economic outlook for each Federal Reserve district; the Boston Federal Reserve oversees the First District, which includes all of New England (except for Fairfield County, CT, which has long had close economic ties to New York City).
The only sector with positive news is biopharmaceuticals; in most other manufacturing areas, there are double-digit declines. “Respondents say that consumers and businesses remain especially wary of spending for big-ticket items or in bulk, and many note that demand is off more sharply in foreign markets than domestically.”
Revenues are down in the software and information technology realms, “driven by sharp declines in new software license revenues.”
There seem to be plenty of job-seekers, but demand for labor remains soft generally. Medical billers, engineers, programmers and skilled electricians are specializations for which there is more demand than supply. Still, excluding manufacturing, the labor market in New England seems stronger than that of the nation as a whole.
Commercial real estate vacancy rates have been rising: “In both Providence and Boston, the … shrinkage of large employers has pushed up office vacancy rates, including a significant increase in space available for sublease in Boston.” Residential real estate is weak everywhere except New Hampshire. Condo sales remain soft regionally; in Massachusetts the median condo price declined 14% in April vs 2008.
Adding to the bad news, the Boston Federal Home Loan Reserve Bank, which provides key funding to about 400 New England banks, recently reported that it can’t file its annual report with the SEC because it’s still trying to figure out the charges it needs to take against its mortgage-backed securities portfolio. The bank’s concerns are focused on securities related to Alt-A loans, made to borrowers who usually provided limited documentation of their income.