Entire financial life heightened slowly to an average pace since the last report of all Districts except St. Louis with a decline. According to the reports, consumer spending increased unobtrusively in this period. Consumer spending increased on a strong and average speed; during the reporting period there was an increase in retail sales in Cleveland, Philadelphia, Minneapolis, San Francisco, New York, and Boston. The cold weather affected sales in some districts. Sales from motor vehicles elevated in many districts.
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Chicago reported an increase in sales during October, which subsequently reduced in November suspecting that dealers were waiting for the end of year deals. Kansas City and Dallas had fixed order. There was stabilization of inventories in Dallas, and an increased the inventory levels in Kansas City. Flooding in Thailand affected Both Philadelphia and Dallas supply disruptions due to external nameplates.
Business service plan bounced around a flat line since the last report. Bank lending rather added on than the final report and rapid growth in home refinancing growing. Manufacturing activity spread out, energy and mining sectors raised across the country also a reported markup of oil exploration in, Kansas City, Minneapolis, San Francisco, Dallas, and Cleveland increase in gas extraction. In Richmond, tourism showed no increase, but there were higher expectations in Dallas airlines to accommodate increased demand (Beige book).
There was a discrepancy in the changes of credit standards and quality across Districts. There was an increase in Philadelphia, but a reasonable rate and an improving credit quality in Kansas. All the real estate activities remained inactive. Chicago and Minneapolis had an even corn yield with a decreased soybean production. Wages and salaries remained fixed across Districts. However, in Cleveland there was discrimination as some drivers hired their relatives for the job openings available.
In Chicago district Consumer spending Increased in October and at the beginning of November. The Increase in sales during the reporting period resulted from the increased sales marketing. There was a kind of markup of auto sales in October which slowed in November. However, there were expectations for retailers to use long promotional periods and excessive discounting to steady up the volumes for the holiday shopping.
In Construction and Real Estate, there was a decrease in construction activity, in October and the creation of November there was unobtrusively growth in nonresidential constructions than the reduced real estate conditions. Agriculture in was a decrease in the yield of the crops.
Nevertheless, soybeans and corn were the most harvested in the district during the period of the report. Comparing the grain harvest and the soy beans, the corn was leading than soybeans compared to the previous year. Meaning soybeans had a greater reduction than corn. Farmers anticipated higher prices for the crops in the future, so they stored in increased quantity.
In the above information, there it is clear that Kansas area is better off than Chicago district. In Kansas, the consumer spending has grown with future expectations for the months ahead opposed to Chicago where the growth only increased in October and reduced at the beginning of November.
In terms of constructions and real estate, there were more expectations for home sales than previous months compared to Chicago where there is a reduced number of constructions. Therefore, may prediction for the next nine to twelve months Kansas will have a better overall performance than Chicago (The Conference Board Consumer).
The consumer confidence index in the past few months reduced to 40.9 in October improved again in November up to 56.0 (1985=100). The Index marked up from 27.1 to 38.3 percent. While expectation Index heightened to 67.8 from 50.0. The trust has hit off to the previous summer’s levels and the current conditions improved after six months of reduction. Besides a decrease, in customer’s commendation for field conditions as they enter the holidays the readings will remain weak.
The present day customer valuation improved in November. Good starting business conditions grew from 11.2 percent to 13.3 percent. While those of “bad” ones reduced from 43.7 percent to 38.2. There were those claiming of abundant of job increasing from 3.6 to 5.8 percent and those of lack of job reducing from 46.9 to 42.1 percent.
The anticipation for improvement in business conditions improved from 10.2 to 13.6 percent over the next six months. Those expecting the worse reduced from 21.3 to 15.8 percent compared to those anticipating for adequate of jobs months in the future increasing from 10.8 to 12.9 percent. Those anticipating for fewer jobs reduced from 27.6 to 24.1 percent, essentially those anticipating for markup in their earnings increased from 11.1 to 14.9 percent.
The consumer confidence is useful since it assists the executives to determine the course of their decisions. Their confidence creates an indication of their disposition of consumption that helps in the determination of the level production in order to provide at the cost effective levels.
The factors that affect the conversion of the consumer confidence in the economy are income. An increase in the level of the consumer leads to a greater increase on the level of expenditure. This is because of the Multiplier which tends to overestimate the spending up to 2.5 times. The degree of spending magnifies the amount of income in the economy.
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The expectations of business executives have reduced over the past few months. This refers to the last two quarters and finally at its lowest level over the last two years’ duration. The confidence reduced from 55 to the present 42 showing a significant reduction. They assessed their activity being extremely optimistic about 19 percent showing an improvement in comparison to the 2011.
Those who expected improvement in economic conditions for the next six months were about 19 percent from 43 percent. While those with a negative expectation reduced from 44 percent to 22 percent (The Conference Board Consumer).
The consumer confidence and the executives vary in different dimensions, which is the reason why different CEOs have differentiated suggestions. On the basis of their way each year thirty percent responded had an increase in their plans of capital spending. Most of them increased sales volume. Others had a reason for the decline in the most popular for decreasing spending plans.
I predict that the Committee meeting is going to be on May 2012 since it is the first quarterly of next year. However, the conclusion that I predict that they will need is to increase their level of capital investment in order to cope with the positive economic environment. The other decision is to increase the capacity of inventory in order to increase the number of output as a means of maximizing profit.
Beige book. Federal Reserve Districts. 2011. Web. www.federalreserve.gov/fomc/beigebook/2010/default.htm.
The Conference Board Consumer. Confidence Index Improves & CEO Confidence Declines. 2011 Web. from www.conferenceboard.org.