An economic recovery may well have arrived, but a Federal Reserve report released Wednesday shows just how varied it is proving to be by industry and region.
The mixed picture underscores how fragile the economy remains. While growth overall may have resumed, the nation is still vulnerable to new shocks as long as there are such large pockets of weakness.
The central bank's report "clearly depicts the challenges the U.S. economy faces as it attempts to crawl out of the basement," said Richard Yamarone, chief economist with Argus Research. "Sporadic growth in select regions implies an uneven and potentially difficult process."
Overall, businesspeople around the country "remained cautiously positive" about economic prospects, according to the "beige book," a compilation of anecdotal information the Fed publishes eight times a year.
Wednesday's report found "modest improvements in the manufacturing sector," when the survey was conducted in the weeks leading up to Aug. 31, and that "retail activity was flat."
The most consistent theme in the latest report is inconsistency. For every sector where the worst seems to be over and a recovery is starting to take shape, there seems to be another that remains in deep distress.
The auto industry appeared to be a big winner, for example, though it is unclear how resilient that improvement will be.
The beige book says a majority of regional Fed banks "reported that the recent "cash-for-clunkers" program helped boost traffic and sales," although businesses in the Cleveland and Kansas City regions noted that "used-car sales were adversely affected by the program."
And consumers in much of the country seem to be avoiding large purchases. Businesses contacted by the regional Fed banks saw "improvement in sales, but attributed the increase primarily to back-to-school purchases," the report says.
The Philadelphia, Chicago, Cleveland and San Francisco Fed regions "observed that shoppers remained focused on essentials and continued to refrain from purchasing discretionary and big-ticket items."
There were positive signs from manufacturing, as most of the country reported modest improvement in that sector. The San Francisco Fed in particular said orders rose for manufacturers of semiconductors and other information technology products, and several districts reported increases in automobile and pharmaceutical production.
