The Federal Reserve Beige Book report is out and they acknowledge overall the economy is decelerating. We're in a slow down, minimum. folks. It's official.

Reports from the twelve Federal Reserve Districts suggested continued growth in national economic activity during the reporting period of mid-July through the end of August, but with widespread signs of a deceleration compared with preceding periods.

They also acknowledge one element we have graphed here, raw capacity in manufacturing, is down.

Reports on capacity utilization were mixed. Manufacturers of high-tech products have been operating near maximum capacity of late, although this partly reflects a substantial decline in industry-wide capacity over the past three years, as noted by Dallas. More generally, the majority of Cleveland's manufacturing contacts reported that capacity utilization remained below pre-recession levels. Capital spending plans for manufacturers and firms in other industries generally indicate little change or modest increases in coming months, based on reports from the Boston, Philadelphia, Cleveland, Chicago, Kansas City, and San Francisco Districts.

They also note the increased use of temp jobs and contract labor is repressing permanent employment.

We can’t wait until unemployment is where we’d like it to be” or inflation gets “out of control” to tighten credit

The above is a quote from Federal Reserve Chair Ben Bernanke.

Gets worse, Bernanke believes the economy will not dip into another recession, yet of course, unemployment will remain at high levels.

While the Fed will raise interest rates from a record low before the economy returns to “full employment,” Bernanke said officials don’t know when that process will start. The banking system isn’t fully healthy and lenders are “cautious” in providing credit, he said.

“The unemployment rate is still going to be high for a while, and that means that a lot of people are going to be under financial stress,” Bernanke said at the event, part of a dinner hosted by the Woodrow Wilson International Center for Scholars.

Bernanke’s stance is consistent with that of several Fed colleagues. Atlanta Fed President Dennis Lockhart said June 3 that the central bank may need to raise rates even with “unacceptable levels of unemployment,” while Eric Rosengren of the Boston Fed said last month it wouldn’t be “appropriate” to have rates close to zero with the economy at full employment.

A new amendment, which Senator Dodd has signed onto has been introduced by Senator Bernie Sanders. It appears we have a bait -n- switch or compromise, i.e. back room deal on auditing the Federal Reserve.

Sanders in a floor speech: