Eleven of the 12 regional Federal Reserve banks showed signs of a stabilizing or improving economy during July and August, according to the Fed’s latest Beige Book report. The Beige Book’s anecdotal evidence found that the nation’s worst recession in 70 years is coming to an end. The Fed expects the economy to grow by three or four percent in the fourth quarter of 2009. That stands in sharp contrast to the one percent decline from April through June, and the 6.4 percent contraction during the first quarter of the year.
In the latest survey, the Dallas region reported that economic activity had “firmed”. The Fed regions of Boston, Cleveland, Philadelphia, Richmond and San Francisco reported “signs of improvement.” In Atlanta, Chicago, Kansas City, Minneapolis and New York, the Fed reported activity as “stable or showing signs of stabilization. The St. Louis region was the exception, where the contraction’s pace “appeared to be moderating.”
“We are slowly on the road to recovery,” former Fed Governor Robert Heller told Bloomberg Television. The Beige Book “confirms that we have turned the corner.”
Despite the Beige Book’s declaration that stabilization is occurring, it still found weakness in the commercial real estate market where little new construction is underway. According to the report, “Several participants noted that banks still faced a sizable risk of additional credit losses and that many small and medium-sized banks were vulnerable to deteriorating performance of commercial real estate loans.”
According to Krugman, “We really wanted a place that has the ultimate New York luxury, which is a washer and a dryer. I do expect New York prices will fall some more, but we need a place. And I came into some money.” Krugman’s Nobel Prize included a $1.4 million cash award. The six-room apartment has nine-foot ceilings, offers “romantic cityscapes” and has a monthly maintenance fee of $1,820. 
The Fed is planning to purchase as much as $1.25 trillion of mortgage-backed securities, $200 billion of federal agency debt by the end of 2009, and $300 billion in long-term Treasuries by September. Bernanke believes that some of these assets may remain on the Fed’s books for an undetermined period of time.