California Business Minute™

Hi, I am Tim Johnson and welcome to the California Business Minute.

The Federal Reserve released its latest edition of its Beige Book that confirmed what
small businesses and large know all too well – the economy fell off the cliff in mid-October.

Economic activity in the West, overseen by the Fed’s Twelfth District bank in San Francisco,
weakened decidedly during the survey period of mid-October through late November, it says
in its Beige Book report.

Upward price pressures eased overall because of declines in the prices of energy and some
commodities and widespread discounting in the retail sector, it says. “Most retailers struggled
with unusually weak demand on a seasonal basis, and demand for services continued to fall.
Manufacturing activity slowed further,” the report says. Agricultural sales generally continued
at a brisk pace, but energy providers faced declining demand and falling output prices, says
the Beige Book. Activity in District housing markets remained weak on net, and demand for
commercial real estate continued to erode. Contacts from financial institutions reported weaker
loan demand amidst sharply restricted credit availability and further tightening of lending standards.
Extensive discounting held down final prices for many retail items, and retailers anticipate
further discounting, in line with expectations for an unusually weak holiday spending season.
“Upward pressures on wages have largely disappeared. Contacts reported job cuts and hiring
freezes across a wide range of industries, causing unemployment to rise in most areas,” says
the report. The few open positions have been attracting large numbers of applicants, thereby
alleviating upward wage pressures, it says. “Wage gains have slowed markedly for worker groups
who previously had seen rapid growth, notably those skilled in the use of advanced technologies.”

I am Tim Johnson and this has been the California Business Minute.