Beige Book: Regional economy is worsening

The New England economy deteriorated in recent months, with companies reporting slumping sales, increasing layoffs and uncertainty about the future, according to a Federal Reserve survey of businesses.

The survey, known as the Beige Book, collects anecdotal information from businesses to help assess economic conditions in advance of the Fed's rate setting meetings. The Fed is widely expected to cut its benchmark rate to a record low 0.5 percent from 1 percent when policy makers meet December 15-16.

In New England, the Fed survey found business executives to be cautious at best, and many gloomy about near-term prospects. Manufacturers, many reporting double-digit sales declines, are laying off or furloughing workers, firing temporary workers and imposing pay cuts, according to the survey. Retailers have frozen hiring and scaled back hiring for the holiday season. Staffing firms, which place temporary and permanent workers, were described as gloomy. (To view some of the Fed's findings on New England, please click here.)

One staffing executive told the Fed: "Everybody's spooked. There's no hiring going on at all.'"

The mood among New England commercial real estate firms is "downbeat" as rents have fallen 10 to 15 percent from early this year, and office vacancy rates in Boston and suburbs climbed into double-digits, according to the Beige Book. Executives expect layoffs in financial service and other firms to increase vacancy rates further.

Some residential real estate markets saw sales recently rise from a year ago, but prices have plunged sharply. One realtor expected the housing downturn to last into next year.

Technology firms reported mixed sales, ranging from year-over-year declines of 10 percent to gains of nearly 25 percent. Some tech firms are planning layoffs; others to expand.
(By Robert Gavin, Globe staff)