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Michael Stoler Newsletter


U.S. affluent consumers seem to be less confident now that the election results are in.

Twenty-nine percent of those surveyed feel positive about the U.S. economy.

This figure is an 8 percent drop since the October 2012 survey when 37 percent of respondents said that the country was better off. In comparison, the average figure in 2011 was 25 percent.

These results seem to signal that affluent consumers are not as confident that government leaders can adequately take on the country's debt.

In terms of their personal financial situation, 28 percent of respondents reported that they expect to decrease how much they spend on luxury over the next 12 months whereas 18 percent reported this in the previous survey taken in October.

   Federal Reserve Beige Book reported that economic activity expanded

During the week that the stock market reached record highs, the Federal Reserve latest Beige Book indicated that economic activity generally expanded at a modest to moderate pace since the previous Beige Book released in February. 

Five Districts reported that economic growth was moderate in January and early February, and five Districts reported that activity expanded at a modest pace. The Boston District said the economy continued to expand slowly, and the Chicago District reported that economic activity grew at a slow pace.  

Most Districts reported expansion in consumer spending, although retail sales slowed in several Districts.  

Automobile sales were strong or solid most Districts, and tourism strengthened in a number of Districts.  

The demand for services was generally positive across Districts, most notably for technology and logistics firms.  

Transportation services activity was mixed among Districts, although the majority of contacts were optimistic about future activity.  

Manufacturing modestly improved in most regions, with several Districts reporting strong demand from the auto, food, and residential construction industries. 

residential real estate markets strengthened in nearly all Districts and home prices rose amid falling inventories across much of the country.  

Commercial real estate activity was mixed or improved slightly in most Districts, and financing for commercial development remained widely available.

Overall loan demand was stable or slightly higher across nearly all Districts, and several bankers noted stiff competition for qualified borrowers.  

Consumer Spending and Tourism

Consumer spending expanded in most Districts, but several Districts reported mixed or lower activity among non-auto retailers.  

Sales strengthened in the Philadelphia and Richmond Districts, and retail sales were higher than a year ago in the Boston, St. Louis, and Minneapolis Districts. San Francisco reported modest growth in sales, Dallas noted flat to slightly higher sales activity, and New York said retail sales were strong in January but slowed in February primarily due to weather.  

The Chicago District said consumer spending increased at a slower rate, while Cleveland and Atlanta noted mixed sales activity. Kansas City said retail sales decreased since the previous survey period and were expected to remain flat in the months ahead.  

Many District contacts commented on the expired payroll tax holiday and the Affordable Care Act as having restrained sales growth.  

Many Districts noted rising gasoline prices and fiscal policy as having a negative effect on consumer sales, and contacts in the Boston, New York, and Minneapolis Districts said severe weather depressed sales somewhat.  

Contacts in several Districts reported a shift in sales activity from local malls to the Internet and indicated deep discounting among retailers was becoming increasingly common. San Francisco noted somewhat soft sales for traditional retail grocers, whose competition has increased from discount and online retailers.  

Most Districts reporting on auto sales noted solid or strong increases in sales, with the exception of mixed activity in the St. Louis District and a seasonal slowdown in the Dallas District.  

Auto dealers in the Philadelphia District attributed the strong sales in New Jersey to the continued effect of Hurricane Sandy. The New York District reported wholesale and retail auto credit conditions as positive, with one contact noting increasingly aggressive lenders. Most Districts' contacts were cautiously optimistic about future auto sales.  

Tourism remained solid or advanced further in most Districts, spurred by increased snowfall during the winter ski season.  

Travel was reported as robust in the New York District, particularly in Manhattan, as well as at hotels in the outer boroughs that are still occupied by displaced residents, utility workers, insurance adjusters, and others due to Hurricane Sandy.  

Nonfinancial Services

Nonfinancial services activity continued to grow at a modest pace since the previous Beige Book.. Staffing services firms in the Boston and New York Districts saw improved conditions, but activity was mixed in the Dallas District. Boston, New York, Philadelphia, and Kansas City services contacts continued to be optimistic about growth in the coming months and in the second half of 2013.  

Transportation services activity was mixed.  


Manufacturing conditions improved in nearly all Districts, but the increases were generally modest. Boston, New York, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis and San Francisco reported some increases in factory activity, but the majority noted that the pace of recovery was slow.  

Contacts in the Boston, New York, Philadelphia, Cleveland, Atlanta, St. Louis, Kansas City, and Dallas Districts expected activity to improve over the next few months across a wide variety of industries.

Real Estate and Construction

Residential real estate activity continued to strengthen in most Districts, although the pace of growth varied.

Contacts in the Boston, St. Louis, Minneapolis, Kansas City, Dallas, and San Francisco Districts noted strong growth in home sales, while New York and Chicago reported slight improvements.  

Overall commercial real estate conditions were mixed or slightly improved in most Districts.  

Commercial real estate activity grew modestly in the Philadelphia, Richmond, Atlanta, and St. Louis Districts, and activity in the San Francisco District expanded.  

Boston and New York reported mixed activity, while the Kansas City and Dallas Districts noted few changes.  

Office vacancy rates declined across most of the New York District, and industrial vacancy rates in upstate New York posted their lowest levels in three years.  

Commercial development and leasing activity increased in the San Francisco Bay and Seattle markets, fueled by sustained growth in the technology sector.  

Commercial construction improved by varying degrees in the Atlanta, Chicago, St. Louis, Minneapolis, and Kansas City Districts. Respondents in the Boston District expressed concerns about overbuilding in Boston's apartment market and office sector, while Philadelphia contacts noted an increase in energy-related projects and repair work resulting from Hurricane Sandy. Cleveland, Atlanta, and Chicago reported high demand for manufacturing space, with some Chicago manufacturers leasing temporary space to accommodate increased demand. Credit for commercial development and transactions was widely available, although Boston noted a large decline in loan demand and contacts in the Cleveland District said financing difficulties continued.  

Banking and Finance

Loan demand was steady or increased across all the Districts that reported.  

Borrowing standards were reported to have been loosened in some Districts.  

Employment, Wages, and Prices

Labor market conditions generally improved, although several Districts reported restrained hiring. Many Districts reported a rise in temporary employees, while staffing contacts in the Boston District noted an increase in the placement of permanent and temporary-to- permanent workers.  

The majority of Districts reported that price pressures remained modest, but some input costs continued to rise.  

Reported for the Second District which includes New York & New Jersey

Economic activity in the Second District has continued to expand at a moderate pace since the last report.

Business contacts report some pickup in input price pressures but relatively few say they are increasing their selling prices.

The labor market has shown scattered signs of improvement: manufacturers report an upturn in hiring, and a major employment agency notes increasingly strong demand for temps.

Retailers report that sales have generally been strong and ahead of plan in January and early February.

Tourism activity has been mixed but generally strong thus far in 2013, with hotels getting an additional boost from displaced residents and recovery workers in the aftermath of Superstorm Sandy.

 Both residential and commercial real estate markets showed signs of improving since the last report. Finally, bankers report increased loan demand, no change in credit standards, further narrowing in loan spreads, and lower delinquency rates on commercial loans and mortgages.   

Consumer Spending

Retailers report that sales were strong in January but mixed in early February. Moreover, contacts report that the mix of sales activity has continued to shift from actual mall sales to Internet sales.  

One retail contact notes that deep discounting is becoming increasingly common  

Auto dealers in the Buffalo and Rochester areas report that new vehicle sales were exceptionally strong in January, running 20-30 percent ahead of a year earlier, and have shown continued strength in early February--a marked contrast from December, when sales were sluggish. Used vehicle sales have remained flat recently. Wholesale and retail credit conditions for auto purchases are reported to be in good shape, and one contact notes that lenders have become more aggressive.   

Tourism activity has generally been robust since the last report. Manhattan hotels report that business was relatively brisk in January, with revenues up 10-15 percent from a year earlier, driven largely by substantially higher occupancy rates but also boosted by a 5 percent increase in room rates.  

Hotels in the outer boroughs have seen even more dramatic increases, upwards of 40 percent; much of this surge in activity is attributed to Sandy, as hotel rooms are being occupied by displaced residents, utility workers, insurance adjusters, and others who are helping with rebuilding and restoration.  

 Broadway theaters report that attendance and revenues have been running below comparable 2012 levels in January and early December--mainly reflecting a 20-30 percent reduction in the number of shows.

Finally, consumer confidence in the region was mixed in January.  

The Conference Board's survey of residents of the Middle Atlantic states (NY, NJ, Pa) shows confidence rebounding strongly in January, after slipping to a more than one-year low in December; however, Siena College's survey of New York State residents shows confidence slipping to a 5-month low in January, with declines spread evenly between upstate and the New York City area.  

This Week on "The Stoler Report-New York's Business Report"

Premiering:  Tuesday,  March 19th at 11 PM  "What's Happening in Williamsburg?"

The Stoler Report:-NY's Business Report: Healthcare Executives Outlook for 2013 - Part 1.


Andrew Barrocas MNS

Peter D'Arcy        M & T Bank

Jared Epstein      Aurora Capital

David Schwartz   Madison Realty Capital/Silverstone Property Group 

   The Stoler Report-New York Business Report airs 15 times a week on CUNY TV and PBS

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03/18/2013 - 19:45


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