The U.S. economy's sharp slide eased in the late spring, and hopes for future business activity improved, a government report showed Wednesday, suggesting that the worst of the recession has passed. The Federal Reserve (Fed) survey of economic conditions found that five of the central bank's 12 regions said the “downward trend is showing signs of moderating.” Moreover, “several” regions said their expectations of future business activity have improved. Still, the Fed survey, called the Beige Book because of the color of its cover, said the weak U.S. economy is showing only sporadic signs of recovery. The report said manufacturing activity “declined or remained at a low level across most districts” but that some regions “reported that the outlook by manufacturers has improved somewhat.” Retail spending, a key driver of economic activity, “remained soft,” with “consumers focused on purchasing less expensive necessities and [avoiding] buying luxury goods,” the survey said. “New car purchases remained depressed, with several districts indicating that tight credit conditions were hampering auto sales.” Some districts reported “an uptick in home sales, and many said that new home construction appeared to have stabilized at very low levels,” the report said. The survey is consistent with observations made by Fed Chairman Ben Bernanke and other central-bank officials that the recession—which began in late 2007 and is now the longest since the second world war—is loosening its strong hold on the economy. The report suggests the Fed will maintain its aggressive policy of record-low interest rates and massive amounts of liquidity injected into the financial system.
