Federal Reserve Sees Economy Slowly Improving in Most of Nation
WASHINGTON (AP) _ The Federal Reserve today issued a modestly upbeat assessment of business conditions around the country, stating, ″economic activity has been improving slowly in most of the nation.″
The report, the Fed’s last summary of regional economies before the election, found weakening conditions only in the areas covered by its San Francisco and Chicago district banks.
″Cleveland, Dallas, Kansas City, Philadelphia and Richmond report modestly improved conditions in their districts,″ said the report, known as the ″beige book.″
″The remaining districts generally reported a continuation of slowly expanding activity,″ it said.
Although today’s report included cautions - such as ″the pace of recovery has been uneven across many regions and sectors″ - it nevertheless was slightly more positive than the last beige book, released on Aug. 5.
″Retail sales are reported steady or slightly higher by most districts, but auto sales are lackluster,″ it said. ″Manufacturing activity has weakened in autos, aerospace, and defense-related industries. ... Outside these sectors, however, improvement is noted in orders, production and sales.″
The Fed report was compiled from information gathered by its 12 regional banks, based on interviews with business people conducted before Sept. 15. It will be used by top monetary policy-makers when they meet Oct. 6 to review their interest-rate polices.
Since mid-1989, the central bank has reduced interest rates 24 times in an attempt to stimulate the stagnant economy, with the latest reduction on Sept. 4 bringing a key interbank lending rate to a 29-year low of 3 percent.
Today’s only mildly optimistic beige book report, named after the color of its cover, probably would not serve as a bar to another cut, particularly if unemployment surges as expected this month.
However, the Fed has come under pressure from foreign finance officials to hold U.S. rates steady, or even raise them, in order to help calm gyrations on world currency markets.
Today’s report also noted that farming conditions were good in most areas and that housing construction ″appears to be improving slowly ... particularly in low to mid-priced housing.″
It said non-residential construction remains weak.
Meanwhile, it said Hurricane Andrew probably will stimulate construction and other economic activity in Florida and Louisiana. The storm has put little upward pressure on prices, except for lumber and natural gas, it said.