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Business

Survey: Economy still languishing, with earliest rally not until late ’09

Job seekers line up for assistance Friday at an Economic Development Department office in Sunnyvale, Calif.  The Federal Reserve’s new snapshot of business activity nationwide, released Wednesday, showed the economic picture darkening over the last two months and revealed little hope for a quick turnaround.

Job seekers line up for assistance Friday at an Economic Development Department office in Sunnyvale, Calif. The Federal Reserve’s new snapshot of business activity nationwide, released Wednesday, showed the economic picture darkening over the last two months and revealed little hope for a quick turnaround.

March 5, 2009

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Job seekers line up for assistance Friday at an Economic Development Department office in Sunnyvale, Calif.  The Federal Reserve’s new snapshot of business activity nationwide, released Wednesday, showed the economic picture darkening over the last two months and revealed little hope for a quick turnaround.

Job seekers line up for assistance Friday at an Economic Development Department office in Sunnyvale, Calif. The Federal Reserve’s new snapshot of business activity nationwide, released Wednesday, showed the economic picture darkening over the last two months and revealed little hope for a quick turnaround.

— Dismal. Very weak. Steep declines. The government’s latest report on the front lines of the economy is laced with the language of recession.

Almost every region of the country in the Federal Reserve survey released Wednesday reported the economic climate was not just bad but getting worse. Businesses said they expected no recovery until late this year at the earliest.

The survey, known as the Beige Book, showed widespread declines in production, from the factories of Cleveland to the high-tech firms of Texas and California.

Factories exposed to the housing industry were hardest hit. Construction equipment and materials, such as primary metals, wood products and electrical equipment, saw especially steep drops in production. So did makers of furniture and cars.

The survey rated the prospects for economic improvement anytime soon as “poor, with a significant pickup not expected before late 2009 or early 2010.” The only bright spots were in food, drugs and biotechnology products.

Consumer spending was “very weak,” the survey found.

The survey summarizes information, most of it anecdotal, supplied to the Fed’s 12 regional banks. In 10 of those regions, economic activity worsened. In Philadelphia and Chicago, the economies merely “remained weak,” the survey said.

The Fed will use the Beige Book as one factor in its discussions when Fed Chairman Ben Bernanke and his colleagues meet March 17-18.

At that meeting, the Fed is expected to hold interest rates steady, at their record low. The federal funds rates is already almost as low as it can go, set at a range of zero to 0.25 percent.

Still, most economists believe the recession will drag on at least for most of this year, even after the enactment of President Barack Obama’s $787 billion stimulus package. Bernanke told Congress on Tuesday that the impact of the stimulus package is subject to “considerable uncertainty.”

On Friday, the government will release its February jobs data, and economists expect the unemployment rate to rise from its January level of 7.6 percent.

The economy also has been battered by a collapse in the housing market and a lockup in lending that has made it difficult to secure financing for homes, cars and household appliances.

The Fed survey said there were “steep declines” in manufacturing activity in some sectors, and “pronounced declines overall.” Factories are getting hit by slower demand at home and overseas.

Among the encouraging signs, the Boston region reported sales were growing at a double-digit pace for biopharmaceutical firms. The Chicago region reported strong demand for drugs, and the Richmond, Va., region noted temporary hiring at drug companies.

In the San Francisco and Philadelphia regions, processors of food and certain chemicals reported a pickup in business. And airplane makers in the St. Louis region are planning to expand production.

But the overall picture was unmistakably dark. Demand fell for business consultants, accountants and legal services. Even health care services suffered. In the Richmond, Minneapolis and San Francisco regions, health care providers reported fewer patients, partly because fewer people were having elective surgery.

Recession-battered Americans and companies cut back on travel, while some regions — notably Kansas City and San Francisco — noted a substantial drop in businesses at restaurants.

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