Fed Beige Book: Economy Is “Weak”

Companies cited include Abbott Laboratories, Church & Dwight, Chevron Corporation and International Business Machines.

The Fed used the term “weak,” or some version of it, 25 times in today’s Beige Book. For example:

• Economic activity continued to weaken
• Most Districts reported a general weakening of labor market conditions
• Several Districts noted weaker conditions in transportation services

The Fed went out of its way to describe economic conditions as bad and worsening yet somehow avoided the word “recession.” If it walks like a duck and talks like a duck…

No one should be surprised by today’s report from the Fed, even if they avoided the “R” word. The economy is in a recession and conditions will probably get worse before they get better. Today’s Beige Book simply confirmed what we all know - consumers and businesses are struggling.

The key for investors is to stay conservative, but keep an eye on those stocks that could be benefit from an economic rebound. Less economically sensitive companies like Abbott Laboratories (ABT) and Church & Dwight (CHD) provide reduced risk now. Companies like Chevron Corporation (CVX) and International Business Machines (IBM) will provide upside once we finally have visibility into the timing of a recovery.

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