The U.S. economy continued to weaken in March and early April, but the pace of contraction was slowing amid a few signs the country's prolonged recession may be nearing an end, the Federal Reserve (Fed) said Wednesday. The U.S. central bank said in its Beige Book report that “overall economic activity contracted further or remained week,” though five of 12 Fed districts noted a “moderation in the pace of decline, and several saw signs that activity in some sectors was stabilizing at a low level.” Fed officials say massive monetary stimulus and unprecedented programs to promote growth by flooding markets with money should gradually restore growth in the second half of the year. Particularly, the central bank has tried to increase demand for homes by purchasing mortgage-backed securities, helping to push home-loan interest rates to the lowest level in a generation. “Housing markets remained depressed overall, but there were some signs that conditions may be stabilizing,” the Fed report said. “Outlooks for the housing sector were generally more optimistic than in earlier surveys, with respondents hopeful that increased buyer interest would lead to better sales.” However, the survey was pessimistic about the general economy, which has suffered from a prolonged recession that has cost millions of jobs. Labor-market conditions were described as weak, with layoffs, temporary shutdowns, and hiring freezes widespread. “Many 2008 college graduates are still looking for jobs, with 2009 graduates now entering the market,” it said. As a result of economic weakness, the Fed reported downward pressure on prices, including significant discounting among retailers, and many service providers slashing fees. Consumer spending—which accounts for two-thirds of U.S. economic activity—remained weak, but some Fed districts said sales rose from January/February levels. Manufacturing continued to weaken in most districts. “Several firms in these sectors noted that demand for products related to autos or housing ranged from ‘weak' to ‘horrible',” the report said.
