Economic conditions in the Federal Reserve's First District, 2002-2003

Federal Reserve Board

The First District (Boston) economy shows few signs of improvement. Retailers cite disappointing December (2002) results, although some gained in January and February (2003). Most manufacturing contacts report weak demand for goods. Commercial real estate markets in New England remain very slow - no one wants to buy. Most software and information technology providers report that demand is declining. The outlook for Boston is highly uncertain and virtually no contacts are making plans based on expectations of an upturn.

Tourism

Conditions in the travel and tourism sector in the First District seem to remain weak; contacts report hotel occupancy rates in the Boston area remain low because of light corporate and international travel.

Comparisons

Reports from the twelve Federal Reserve Districts indicated subdued growth in economic activity from mid-November through early January (2002), with little change in overall conditions relative to the last survey period. Most Districts characterized growth as "sluggish" or economic activity as "soft" or "subdued." The weakest report came from Dallas, where economic activity "remained anemic." As in the last survey, conditions in the New York, Philadelphia, and Cleveland Districts were more favorable overall than in other Districts, with each, especially New York, describing various signs of improvement.

Thus, it seems as though Boston is pretty much level with the rest of the Federal Reserve Districts - having both highs and lows in various industries. For example, pertaining to temporary employment, conditions in the staffing industry are diverse, with the majority of companies experiencing a modest increase in revenues and profits during 2003. The supply of labor supply remains abundant. Wages and billing rates have been kept mostly unaltered, although many express alarm at steady increases in employee insurance costs. Temporary hiring in manufacturing and light industry is significantly vulnerable, with Vermont reportedly lagging behind the other New England states. Staffing firms are keeping their own payroll and capital spending to a minimum, with slight occurrences of continued restructuring or reorganization.