WASHINGTON — The pace of overall economic activity inched up a notch in June and July, while apparel sales were sluggish in some areas of the country and robust in others, the Federal Reserve reported Wednesday.

Apparel sales “improved noticeably” in New York while sales in Atlanta, Kansas City and Minneapolis posted slight to modest gains, according to the Fed’s Beige Book report, a snapshot of the economy based on surveys of businesses in the bank’s 12 districts.

Retailers in many districts said they did not expect the recently implemented reductions in federal income taxes to have much impact on retail sales while the employment picture remained weak at best.

President Bush attempted to reassure the American public about the economy Wednesday in a nationally televised news conference in the Rose Garden.

Bush defended his handling of the economy and his tax cuts and claimed the economy is on the verge of a turn-around.

“The stock market started to decline in March 2000, then the first quarter of 2001 had a recession and then we got attacked on 9/11,” said Bush. “And then corporate scandal started to bubble up to the surface which created a lack of confidence in the system, and then we had the drumbeat to war [in Iraq] every day last summer to this spring. That’s not a convincing environment for people to take risk.”

He insisted the economy is growing but noted there are a lot of obstacles to overcome, including the unemployment rate of 6.4 percent, a nine-year high.

“There are hopeful signs,” Bush said. “Most economists believe over the next 18 months we will see positive economic growth: Interest rates are low, housing starts are strong and manufacturing indices are improving….I had a policy decision to make and I made the decision to address the recession by a tax cut.”

All of these factors led to a mixed economic picture in the Federal Reserve’s districts over the past two months.

Eight of the 12 districts reported an uptick in overall activity while four — Chicago, St. Louis, San Francisco and Atlanta — reported sluggish or mixed activity.Apparel sales were weak in the Boston, Cleveland and Philadelphia districts but were higher in the New York and Richmond districts, the Fed said.

The New York district outperformed other areas with a strong gain in apparel sales as well as a pickup in women’s apparel sales.

“Sales of seasonal merchandise, such as summer apparel, lawn and garden, cooling appliances, have been particularly robust,” the Fed said in the report. “A number of retail chains note a marked pickup in sales of women’s apparel.”

In the Philadelphia district, sales of seasonal merchandise “picked up noticeably as hot weather took hold of the region, although several merchants noted that women’s summer apparel has not been selling well, continuing the lackluster trend in sales of women’s apparel generally,” the report continued.

A central North Carolina department store manager quoted in the report said sales had been “erratic” as local textile plants extended their summer shutdowns.

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