WASHINGTON (MNI) – The following is the Federal Reserve text of the
summary of its Beige Book economic summary to be used by at the next
meeting of the Federal Open Market Committee, published Wednesday:

Overall economic activity increased somewhat since the last report
across all Federal Reserve Districts except St. Louis, which reported
“softened” economic conditions. Districts generally reported increases
in retail sales and vehicle sales. Tourism spending was up in a number
of Districts. Reports on the services sector were generally mixed.
Manufacturing activity increased in all Districts except St. Louis, and
new orders were up. Many Districts reported increased activity in
housing markets from low levels. Commercial real estate market activity
remained very weak in most Districts. Activity in the banking and
finance sector was mixed in a number of Districts, as loan volumes and
credit quality decreased. Agricultural conditions were mixed as well,
with positive conditions reported in Districts from the central and
western parts of the country, while negative conditions were reported in
the mid and southern Atlantic Districts. Mining and energy production
and exploration increased for metals, oil and wind.

While labor markets generally remained weak, some hiring activity
was evident, particularly for temporary staff. Wage pressures were
characterized as minimal or contained. Retail prices generally remained
level, but some input prices increased.

Consumer Spending and Tourism

District reports indicated that consumer spending increased during
the reporting period. New York and Cleveland reported that recent sales
strengthened, while sales rebounded in Richmond and Kansas City. Slight
sales gains were reported in Philadelphia. Retail sales in San Francisco
continued to improve, but remained somewhat sluggish on net. In St.
Louis several new establishments opened, particularly in the food
industry. Several Districts described consumers as somewhat more
confident. Businesses were cautiously optimistic regarding future sales:
Cleveland, Atlanta, Kansas City and Dallas noted that retailers expect
sales to improve during the upcoming months. Sales of home furnishings
and electronic goods increased in a number of Districts, while seasonal
apparel sales were up in New York, Philadelphia and Kansas City. New
York and Minneapolis noted that shopping by Canadians was strong at
businesses near the border. Atlanta reported that retailers continued to
keep inventory levels lower than normal, and retailers in New York
reported that inventories are in very good shape.

Vehicle sales improved in a number of Districts during March. New
York, Philadelphia, Atlanta, Chicago, St. Louis, Minneapolis, Dallas and
San Francisco noted that auto sales picked up in recent weeks. Cleveland
described sales as decent, while sales were steady in Kansas City and
mixed in Richmond. Several Districts noted that favorable pricing and
credit terms helped lure buyers into showrooms. Dealers in Philadelphia
indicated that they expect sales to increase during the next few months.

Tourism conditions also improved during the reporting period. New
York, Richmond, Chicago, Minneapolis, Kansas City, Dallas and San
Francisco pointed to signs of increased tourism activity. Tourism was
described as stable in most parts of the Atlanta District. Hotel
occupancy rates were rising in New York, Chicago, Kansas City, and San
Francisco. Reports on room rates were mixed: New York and Kansas City
noted increases, while Chicago reported rate cuts, particularly at
luxury hotels. Managers at mountain resorts in the Richmond District
reported that this winter was one of their best ski seasons ever.
However, Atlanta noted that corporate bookings remained at very low
levels at some high-end resorts.

Nonfinancial Services

Business services were mixed, with some signs of economic recovery.
Boston and Minneapolis reported increased activity. Richmond and Dallas
were mixed, while San Francisco said demand remained lackluster. St.
Louis reported that the sector continued to decline. Advertising and
consulting firms in Boston said demand is up substantially from the
first quarter of 2009, while an advertising contact in Richmond and
professional media services firms in San Francisco characterized sales
as flat at low levels. Dallas reported sluggish demand for
nontax-related accounting and legal services. Law firms in Minneapolis
specializing in debt collections and bankruptcy saw strong demand, while
a Richmond property manager noted a large number of repossessions.

Manufacturing

Manufacturing activity increased since the last report across most
of the country, with all Districts other than St. Louis reporting
increases in orders, shipments, or production. Boston, Cleveland,
Chicago, Dallas and San Francisco reported positive results in metals
and fabrication. Cleveland, Richmond, Atlanta and Chicago reported
increased auto or auto component production. Boston, Richmond, Dallas,
and San Francisco saw increased production in electronic, computers or
high-technology goods. Chicago and Minneapolis saw increased production
of energy-related products. However, for construction-related goods,
Chicago and Dallas reported mixed conditions, Boston reported flat
activity and St. Louis reported decreases. Overall, St. Louis saw more
plant closures than plant openings.

Banking and Finance

Bank lending activity was mixed by category in most Districts.
Atlanta, St. Louis and Kansas City saw weaker loan demand across
categories, while activity in San Francisco was flat at low levels and
Dallas said that demand appears to be stabilizing. Demand for consumer
credit decreased in New York and increased slightly in Philadelphia.
Most banks in Cleveland reported weak consumer loan demand, although a
few contacts saw a slight increase due to seasonal factors. Business and
industrial loan volumes decreased in Philadelphia, Cleveland and Chicago
and were flat in New York. San Francisco noted continued modest gains in
venture capital funding.

Credit standards remained generally unchanged across the nation,
while credit quality was mixed. New York, Cleveland and Kansas City
reported tighter lending standards for commercial mortgages. In Atlanta
several business contacts reported difficulty getting credit. Dallas and
San Francisco said standards continued to be tight. New York saw
increased delinquency rates for all categories except consumer loans,
which were flat. Philadelphia and Richmond saw little change in credit
quality, while Cleveland was mixed. Dallas reported that credit quality
was either stabilizing or improving, and appeared to have turned a
corner. Chicago noted an improvement in consumer and business loan
quality, although credit quality for many small firms continued to
decline.

Real Estate and Construction

Residential real estate activity increased, albeit from low levels,
in most Districts, with the exceptions of St. Louis, where it was mixed,
and San Francisco, where it was flat. Contacts in Philadelphia,
Cleveland and Kansas City expressed concern about whether sales would
continue to grow after the expiration of the first-time home buyer tax
credit. New York, Kansas City, Dallas and San Francisco noted sluggish
sales for high-end homes. Home prices were stable across most Districts,
but decreased in parts of the New York and Atlanta Districts.
Residential construction activity increased slightly in New York,
Atlanta, St. Louis, Minneapolis and Dallas, but remained weak in
Cleveland, Chicago and San Francisco.

Commercial real estate activity was slow across the nation. Notable
exceptions were Richmond, which saw an uptick in commercial leasing, and
Dallas, where the sector was mixed and might be nearing bottom. In
Boston, leasing activity consists largely of renewals, with many
renewing tenants leasing less space. Manhattan Class A office rents were
down 20 percent to 25 percent year over year. Contacts in Philadelphia,
Richmond, Kansas City and Dallas expressed concern that lease
concessions from landlords were putting downward pressure on rents.
Commercial construction continued to be weak in most Districts.
Cleveland saw some development in the energy and industrial segments.

-more- (1 of 2)

** Market News International Washington Bureau: 202-371-2121 **

[TOPICS: M$$CR$,M$U$$$,MMUFE$,MGU$$$,MFU$$$]