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To: pallmer who wrote (4213)	12/20/2002 10:42:47 AM
From: pallmer	Read Replies (1) \| Respond to of 29602

-- Fed's Stern-Xmas sales soft but economy resilient -- MINNEAPOLIS, Dec 20 (Reuters) - The holiday shopping season so far has been mediocre at best, but overall U.S. consumer spending should hold up next year as incomes are still rising, Minneapolis Federal Reserve President Gary Stern said. Although a cloud of uncertainty surrounds the economic impact of a possible war with Iraq, Stern stressed the U.S. economy's resilience to shocks over time and said he expects U.S. economic growth of around 3.5 percent by the end of 2003. "The economy continues to operate at a high level and I expect it to continue to expand," Stern told Reuters in an interview late Thursday. He did note though, that if oil prices continue to rise and remain at high levels, that could weigh on the economic outlook. In recent weeks, however, the holiday shopping season has been lackluster. "I get the sense from talking to retailers and other business people ... it's been mediocre, probably, at best." The Federal Reserve left interest rates steady last week after an aggressive half-percentage point cut in early November, when it said the economy was going through a "soft spot". But if the recent slowdown in activity proves to be more than the weak patch the Fed has so far described, Stern said monetary policy would respond "appropriately." ((Reporting by Victoria Thieberger, editing by James Dalgleish; Reuters Messaging victoria.thieberger.reuters.com@reuters.net; +1 646 223 6300)) (C) Reuters 2002. All rights reserved. Republication or redistribution of Reuters content, including by caching, framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters and the Reuters sphere logo are registered trademarks and trademarks of the Reuters group of companies around the world. nN20362586 20-Dec-2002 15:39:00 GMT