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Archive for Thursday, April 25, 2002

Fed survey finds ‘positive tone’ on economic recovery

April 25, 2002

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— The U.S. economic recovery from the recession is on track.

Solid retail sales, brisk housing activity and improvements for some of the nation's factories gave the economy more momentum in March and early April, the Federal Reserve said Wednesday.

"The overall tone was positive," the Fed said in its latest survey of business conditions around the country. A few Fed regions, however, "expressed qualifications about the pace of the recovery or the strength" in their economies.

For instance, Boston described economic activity as mixed. Cleveland said its economy was improving at a much slower pace than earlier in the year. Kansas City and Dallas said their economies remained weak despite some signs of a turnaround.

The survey, based on information supplied by the Fed's 12 regional bank districts, will be used by Fed policy-makers when they meet May 7 to discuss interest-rate policy. Most economists predict the Fed will not change interest rates now at 40-year lows given the fledgling recovery.

For most regions, retail sales rose moderately or held steady, the Fed said in the survey. Sales of home furnishings did especially well. Car sales were mixed. Tourism activity improved.

Home sales and construction activity increased in most areas, but commercial real-estate market largely still was weak.

Manufacturing either stabilized or showed signs of improving, with some plants hiring back laid-off workers.

Manufacturers' capital spending plans remained limited.

A second economic report Wednesday suggested that for manufacturers, the recovery is in low gear.

Orders to U.S. factories for big-ticket goods, including cars and computers, edged down 0.6 percent last month after a solid 2.7 percent gain in February, the Commerce Department said. The decline was the first in the past four months.

Economists said they did not believe the drop in orders was a sign that the manufacturing sector was headed for a backslide.

"While there is continued movement forward in manufacturing, clearly the sector has not picked up a whole lot of steam," said economist Joel Naroff of Naroff Economic Advisors.

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