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Strategies & Market Trends : VOLTAIRE'S PORCH-MODERATED -- Ignore unavailable to you. Want to Upgrade?

To: Dealer who wrote (37804)	6/13/2001 4:52:47 PM
From: stockman_scott	Respond to of 65232

Fed sees few bright spots ___________________________________________________ By Rex Nutting, CBS.MarketWatch.com Last Update: 2:54 PM ET June 13, 2001 WASHINGTON (CBS.MW) - The Federal Reserve can't find too much positive to say about the U.S. economy. <<The economy weakened in April and May, the Federal Reserve said Wednesday in its periodic Beige Book report on the economy. Read the report. Manufacturing "has declined or remained weak," the Fed said. Retail sales "have been slow to flat." Growth in consumer spending has been "lackluster." New construction "appears to have leveled off." Commercial real estate has "softened." Even mining (outside of energy) is "stagnant." Labor markets "continue to ease in all districts." "The one bright spot is the continued growth in energy exploration," the Beige Book said. While most wage and price increases are moderate, "significant" price increases have been seen in energy and health care. Benefit costs are rising in most districts. The downbeat report will be given to Fed policymakers, who meet on June 26 and 27 to decide what should be done next. The Fed has already slashed its overnight lending rate from 6.5 percent to 4 percent in five bold strokes this year. Most analysts expect the Fed to cut rates by at least 25 basis points on June 27. Another 50 basis point cut cannot be ruled out. The report details the breadth of the slowdown. "The Fed's Beige Book is the most dismal in recent memory," said Steve Cochrane, an economist with the Dismal Scientist. Most districts reported falling new orders and higher inventories in most manufacturing industries. Some slight improvement was seen in the Midwest, with Chicago reporting the worst of the inventory correction over and St. Louis reporting planned increases in high-tech, tobacco and chemical industries. Seven of the 12 districts reported weakness in the telecommunications sector, including New England, California, the mid-Atlantic, the South and Texas. Wages for information technology workers were softening. In the Plains, "workers report favoring job security over higher wages.">>