Federal Reserve's Beige Book Says U.S. Economy 'Subdued'

By Agence France-Presse The U.S. economy is inching ahead sluggishly as people fret over the "geopolitical uncertainties" of war and terror, the Federal Reserve's Beige Book survey said March 5. "Reports from the 12 Federal Reserve districts generally suggested that growth in economic activity remained subdued in January and February," the closely watched report said. "Many reports indicated that geopolitical and economic uncertainties were constraining consumer and business spending and tempering near-term expectations." The guarded tone of the report was little changed from earlier assessments in the previous two Beige Book surveys covering the period since late October of last year. "Consumer spending remained weak, on balance, with a few districts noting a little improvement and others indicating a slight deterioration," the Beige Book said. The Federal Reserve said retailers were reporting flat sales despite fears of terrorism sparking a scramble for duct tape to seal up homes. An extended winter freeze kept many people away from the stores. "Business spending was very soft, with little change in capital spending or hiring plans," the Federal Reserve said. "Most districts still described manufacturing activity as weak or lackluster, although half of the reports noted at least some degree of improvement." The Beige Book survey is released eight times a year. The report will be on the table when the Federal Reserve policy-makers meet March 18 to discuss interest rates in the context of deep concern over the economic impact of any war in Iraq. "Nearly half of the district reports suggested that manufacturing industries were reducing their payrolls, and two said that retailers were downsizing as well," the Beige Book said. Copyright Agence France-Presse, 2003