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For those of you still wondering, yes, the Beige Book is a book that has a beige cover. But what’s more important than what it looks like is what’s inside it. Basically, it is a compilation of reports by the twelve Federal Reserve bank districts on the economic conditions in their areas. It’s pretty important because the FOMC members use it to make their decisions on monetary policy.

According to the most recent report, it seems like Fed officials aren’t all smiles on the future of the economy. Consumer and business spending are very weak while wages are still under pressure. It seems like central bankers are a tad bit too worried on the economy. Heck, they used the word “uncertain” as many times as Kim Kardashian says “like” in one day!

Of course, all this gloom-and-doom talk is taking its toll on confidence since growth is expected to slow in the near future.

But don’t fret! You should know that the report wasn’t all that bad either. Central bankers acknowledge the recent signs of economic growth, saying that the U.S. is not in a recession. (Well, at least not yet.) Although spending is still weak, consumer and business demand have actually improved along with construction and real estate sectors.

Digging deeper into the report, I found out that the rise in consumer spending was led by bigger demand for motor vehicles. The pick-up in activity in the automobile industry might also help explain the rebound in manufacturing.

Recent economic figures from the U.S. confirm what the Fed’s Beige Book is saying. Several sectors of their economy have been showing signs of life but it’s way too early to chalk it up as a recovery.

For instance, housing data released this week revealed that industry activity was beginning to pick up. Housing starts for September came in better than expected at 660,000 while the NAHB market index, an indicator for builder confidence, climbed four notches this month.

More significant improvements were seen in the labor market, as the September jobs figure came in better than expected. Although the 103K increase in employment wasn’t enough to reduce the 9.1% jobless rate, consumer confidence and spending can get a strong boost if hiring continues to pick up. Sooner or later, this could result in improved business confidence, which would spur investment and hiring.

However, recent inflation reports revealed that businesses aren’t so gung-ho about the economic recovery just yet. In particular, there was a discrepancy between the stronger than expected PPI readings and the weak core CPI figure for September. This shows that businessmen are reluctant to pass rising input costs to consumers for fear of dampening demand if they increase prices.

In a nutshell, the Beige Book report and the recent U.S. data affirmed that the economic recovery is still gaining traction and it’s crucial to keep the momentum going. Does this mean that the Fed will eventually have to dole out more stimulus?

In this old man’s opinion, the likelihood of further easing from the Fed is just as hazy as their economic outlook. Policymakers would want to wait and see which direction the U.S. economy is really headed before making a decision. Besides, the Fed would probably want to hold on to the most powerful monetary policy tool they have left and pull the trigger on QE3 only when the situation really calls for it.