Economic worst has passed, Fed suggests
6/11/2009WASHINGTON The economy s sharp slide eased in the late spring and hopes for future business activity improved, suggesting that the worst of the recession has passed.
A Federal Reserve snapshot of economic conditions issued yesterday found that five of the Fed s 12 regions said the downward trend is showing signs of moderating.
Also, several regions said their expectations of future business activity have improved, but they don t see a substantial increase through the end of the year. In the last survey, several regions simply noted signs of some stability at low levels.
Altogether the assessments of businesses on the front lines of the economy appeared to be slightly better than those they provided in mid-April.
The Fed survey, known as the Beige Book for the color of its cover, is consistent with observations made by Chairman Ben Bernanke and other officials that the recession which began in December, 2007, and is the longest since World War II is loosening its hold on the economy.
Manufacturing activity declined or stayed at low levels across most Fed regions, the report said. However, the Atlanta and Kansas City regions indicated that the rate of decline slowed. The New York region described factory activity as having stabilized.
The Cleveland region, which includes Toledo, reported that factory production had either stabilized at low levels or declined. A majority of steel producers reported a sharp decline in shipping volume is showing signs of leveling off but is still at depressed levels. Most anticipate a bottoming out in the third quarter.
Consumer spending, the lifeblood of the economy, remained soft as shoppers focused on buying less expensive necessities. Reports from New York, Minneapolis, and Dallas indicated a modest rise in retail sales, but the Boston, Philadelphia, Cleveland, Atlanta, Kansas City, and San Francisco regions said sales were flat or mixed.
The survey s findings will figure into discussions when Mr. Bernanke and his colleagues meet on June 23 and 24. Economists have mixed opinions on whether the Fed will take more action to bolster the economy.
Many analysts say that the economy is sinking at a pace of between 1 and 3 percent in the current quarter. If they are right, that would mark a big moderation from the steep declines seen since last fall. The economy shrank at a pace of 6.3 percent in the final quarter of last year and by 5.7 percent in the first three months of this year.
The six-month performance was the worst in 50 years.