Fed report: Regional economy improving, credit still tight

The Federal Reserve’s first Beige Book of 2011 paints a generally optimistic picture of the
PAULSON+MONEY.jpgnational economy.

The economic survey released on Wednesday shows positive trends developed in the final months of 2010 for manufacturing, hiring and consumer spending. The housing market remains troublesome.

That’s the national picture. But let’s take a look at the regional outlook. It’s a little less rosy, but not horrible.

Knoxville isn’t specifically mentioned in the report, but East and Middle Tennessee are part of the Fed’s Sixth District.

Here are some highights from the Sixth District summary:

— Holiday sales were “generally positive and above expectations.”

— Manufacturing  orders and production were up slightly, although “those producing construction-related goods continued to experience lower activity.”

— Automobile sales improved and “were ahead of year-ago levels” and commercial truck sales rose modestly.

— The job market continues to recover, “albeit slowly.”

— Businesses, especially small businesses and start-ups, say “obtaining loans at acceptable terms has remained difficult” and banks report “a lack of loan demand from qualified borrowers.”

The comments on credit are troubling. Small businesses create most of the jobs in the country but they need access to capital. Until lenders start spreading around all that money the Fed is printing, we won’t see much improvement in the unemployment rate.

Here’s the Fed’s full report