Fed Says Economy Expanded in January and February
By THE ASSOCIATED PRESS
ASHINGTON (AP) -- Factories hummed and consumers kept cash registers busy in the first two months of this year, fresh evidence that the economic recovery is moving ahead, according to a Federal Reserve report released Wednesday.
"Economic activity continued to expand in January and February," the Fed said in its latest survey of business conditions around the country. However, on the jobs front, "employment has been growing slowly in most Federal Reserve districts," the report said.
Factory activity rose in 11 of the 12 regional Fed districts, good news for America's manufacturers, who were hardest hit by the 2001 recession and have struggled mightily to get back on firm footing. In the Fed's Cleveland region factory activity didn't go up, but rather held steady, the Fed survey said.
Consumer spending on general merchandise rose in most of the Fed's regions except for St. Louis, which reported a slight decline.
Strong or strengthening sales were reported for the New York, Richmond and the Dallas regions. Sales growth was moderate in the Boston, Philadelphia, Chicago, Minneapolis, Kansas City and San Francisco districts. Retailers in Cleveland said sales met or exceeded expectations. In the Atlanta region, sales moderated a bit in February but were up from the same month a year ago, the Fed said.
However, it said that nearly all regions reported slower auto sales in January and February compared to a year ago.
Activity in the service sector also expanded in January and February. Boston and St. Louis, for instance, saw stronger demand for information technology services.
The report, dubbed the Beige Book for the color of its cover, will be used as a basis for discussion when central bank policy-makers meet on March 16.
Most economists expect the rate-setting Federal Open Market Committee to hold rates steady at a 45-year low of 1 percent at that meeting.
Federal Reserve Chairman Alan Greenspan on Tuesday said that extra-low short-term interest rates eventually will have to go up. He gave no clue when.
Since last June, the Fed's main lever to influence economic activity, called the federal funds rate, has been at 1 percent. Near rock-bottom short-term interest rates have helped motivate consumers and businesses to spend and invest, an important factor to lift economic growth.
Some economists believe the Fed will start to push up rates this year. Others don't believe higher rates will come until 2005. |
