WASHINGTON - The U.S. economy started the new year on weaker footing as recession-shocked Americans retrenched further, forcing retailers to ring up fewer sales and factories to cut back production.
The Federal Reserve's new snapshot of business conditions nationwide, released yesterday, suggested the economic picture has darkened and the outlook appears equally dim. "Overall economic activity continued to weaken across almost all of the Federal Reserve's districts," the report concluded.
To help brace the economy, Fed Chairman Ben Bernanke and his colleagues have signaled that they will leave a key interest rate at record-low levels for some time.
Last month, the Fed ratcheted down its rate to hover at an unprecedented level of between zero and 0.25 percent and will keep rates in that range for much - if not all - of 2009, economists predict. The recession, entering its second year, already is the longest in a quarter-century and seems likely to be the longest since World War II.
Most retailers reported "generally negative" holiday sales and are cautious about sales prospects, according to the Fed report based on data collected between late November and Jan. 5. In Cleveland, the downward trend in factory output and steel shipments that began in midthird quarter continued. Residential construction is weak; no improvement is expected in 2009.
In a separate report, meanwhile, the Commerce Department said retail sales fell 2.7 percent in December, marking a record six months in which sales have fallen. For all of 2008, sales dipped 0.1 percent, the first annual drop on government records going back to 1992.