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Beige Book Reports on ‘Sluggish’ Conditions

WASHINGTON — There are some signals the U.S. economy is improving, although consumer spending overall remains “lackluster” and business conditions overall remain “sluggish,” the Federal Reserve reported Wednesday in an...

WASHINGTON — There are some signals the U.S. economy is improving, although consumer spending overall remains “lackluster” and business conditions overall remain “sluggish,” the Federal Reserve reported Wednesday in an overview of economic activity during May and late April.

This story first appeared in the June 12, 2003 issue of WWD.  Subscribe Today.

The snapshot of economic activity came in the Fed’s Beige Book, based on surveys of businesses in the bank’s 12 districts. Far from a declaration of recovery, the Fed highlighted non-retail business optimism in the bank’s districts based in New York, Dallas, Kansas City and Minneapolis.

The Fed noted in the second sentence of its 58-page report that no district “suggested that economic conditions had deteriorated since the last Beige Book” that covered March through mid April. “The unwinding of war-related concerns appears to have provided some lift to business and consumer confidence, but most reports suggested that the effect has not been dramatic,” the Fed said.

The positive signs of recovery from the New York district came from the real estate, construction, office worker and manufacturing sectors. At retail, however, major chains reported sales were “mixed” in May, with department stores reporting business “on or above plan,” and below expectations for discount stores. As was true in several other districts, cool weather hampered apparel sales in New York, the Fed said.

In the Boston and Dallas districts, “retailers continue to focus on ways to reduce their costs and become more efficient — using such strategies as improving their marketing, investing in faster cash registers and increasing the use of part-time workers.”

Activity among manufacturers, which have trimmed about 2 million workers in the last two years, also remained mixed, with New York, Minneapolis and Cleveland reporting an increase in business. In Richmond, production sectors of textiles and furniture reported sharp declines.

Meanwhile, also on Wednesday, a top Commerce official told a gathering of National Retail Federation members in Washington that Bush administration expectations of lower energy prices and a boost from tax-cut legislation should spur a recovery by the end of the year.