The Federal Reserve Board’s Beige Book is out today, and it reinforces the cautious view on the economy expressed by Fed chair Alan Greenspan last week.

Reports from the Federal Reserve Districts suggest that economic activity remained weak from late November through early January. “But while there are still indications of caution, there are also scattered reports of improvement. The Dallas and San Francisco Districts report a continued decline in activity, while the Cleveland District indicates that the regional economy appears to be in the process of bottoming out,” the report notes. Economic activity remained slow or weak to mixed in the other Fed districts, and showed further signs of rebounding in the New York District.

Many districts indicate that their contacts believe a recovery will begin by mid-year or earlier, admitting that the timing and strength are uncertain. That uncertainty has some businesses spending conservatively for the first quarter.

Manufacturing activity was weak or down in most reports, but showed signs of stabilizing or rebounding in some areas. Labour markets remained soft, with numerous reports of shrinking wage and benefit packages. Retail sales showed signs of improvement in late December and early January but results were generally weak overall.

Consistent with today’s CPI report, districts report declining prices for most goods and services with the notable exceptions of security, health care and medical, property and liability insurance. Energy costs are lower and energy inventories are significantly higher than a year ago.