Federal Reserve

Lehman Brothers, if it does go under, will likely fail on a Friday, maybe this Friday. Slate's Nina Shen Rastogi explains why every bank failure in 2008 has been on a Friday (hat tip Matrix):

Why do banks always go bust on Fridays?So the government has a full weekend to reopen them under new management. If the banking business didn't return to normal at the earliest opportunity, the specter of agitated customers might erode public confidence in the banking system, triggering a wider panic. So regulators close banks at the end of the day on Friday to take advantage of the regularly scheduled days off.

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The Federal Reserve released on Wednesday its every-six-weeks anecdotal take on the national economy called The Beige Book. Here's a grab-bag of ultimately meh numbers for New York City:

• Broadway theaters report that business "improved moderately" in July and early August compared to the six weeks before. Attendance and ticket revenues increased 1 to 2 percent annually in July and 3 percent in the first half of August.
• Average Manhattan apartment asking rents declined 2 to 4 percent in July and August compared to the same months last year (more on falling rents here). And: "The rental vacancy rate, though still below 2 percent, is reported to have climbed noticeably over the past year."
• More home sales are falling through due to tighter financing. The sales markets in Brooklyn and Queens were worse for sellers than in Manhattan.
• The number of construction permits issued in June for multi-family buildings was four times greater than in the same month in 2007. And the first half of 2008 saw 63 percent more multi-family building permits issued than the first half of 2007.

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From the Federal Reserve's most recent Beige Book, regarding economic trends in the New York area in April and May:

Bankers report little change in loan demand in any loan category or in refinancing activity. Respondents indicate continued tightening of credit standards across all loan categories, most evidently in the commercial mortgage category. No bankers report eased standards for any type of loan. Respondents note an increase in the spreads of loan rates over cost of funds in all loan categories, especially in commercial and industrial loans. Bankers also report a decrease in average deposit rates. Finally, respondents indicate a rise in delinquencies in all loan categories, but most notably on consumer loans.

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The net worth of American households was an estimated $56 trillion by the end of the first quarter of 2008, according to Federal Reserve numbers out Thursday (PDF). That's $1.7 trillion less than the quarter before.

More on the wealth slide in today's Journal.

According to the Fed, sky-rocketing fuel costs and a shaky job market have not stopped Americans from spending. The April Commerce Report released in Washington today said U.S. consumers spent more than twice what economists had forecast, excluding car sales, Bloomberg reported.

A 0.2 percent overall drop in retail spending--led by the auto industry's 2.8 percent decline--in the first quarter of the year coupled with better-than-expected sales at discount chain Wal-Mart indicate that consumers are flocking to discount stores and holding out on purchases of big-ticket items.  read more »

Brokers, developers, and the media have been trumpeting the resilience of Manhattan’s condo and co-op market for nearly a year, and now even the Federal Reserve has singled it out in the latest installment of its regional survey known as the “Beige Book.”  read more »