Slow Growth Seen Prior To September Attacks

The "Beige Book" report issued by the Federal Reserve Board in early September provided additional evidence that U.S. economic growth was sluggish at best in the weeks leading up to the events of September 11. All 12 of the Fed Districts reported a slow pace of economic activity throughout August and into the first week of September. Several regional reports suggested that any remaining growth in activity was likely to grind to a halt during the early months of this fall.

Overall consumer spending was reported to be flat to down in all regions. The consensus opinion was that federal income tax rebates had only a limited positive impact on spending during August, although retailers were hoping for some improved holiday season spending from the rebate money that was being saved in the short term by most households.

All Fed Districts reported that inventories were in good shape—certainly more in balance with underlying demand than was the case earlier in 2001. The healthiest part of the consumer sector continued to be home building, remodeling, and new/existing home sales activity.