Economy continues to recover slowly, Fed says

Hiring and employment has been a big question recently, as Fed Chairman Ben Bernanke recently told lawmakers that it could takes years for unemployment to drop to more normal levels. In the beige book, Fed officials reported that some new hiring is beginning or in the works, but that upward pressure on wages is still “very limited.”

In the manufacturing sector, business contacts said they were generally optimistic, and that fears of a double-dip recession had largely fallen by the wayside. However, only businesses in St. Louis reported plans for substantial investment in the new year, while some other areas reported plans for some modest hiring.

Retail spending was up in most areas, as sales generally met or exceeded expectations for the holiday season. However, inclement weather towards the end of the year was a drag on retail sales along the East Coast, as well as tourism.

The housing market remained the bearer of bad news at the end of 2010, as the sector was widely reported to be “weak and sluggish.” The large number of existing unsold homes continues to discourage new construction, and distressed properties continue to lower home prices.