Fed survey: Recession deepened in Jan., Feb.
WASHINGTON ” The country spiraled deeper into recession to start 2009, forcing widespread cutbacks and layoffs among everyone from blue-collar workers that once churned out construction equipment to white-collar professionals like business consultants and accountants.
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.
“National economic conditions deteriorated further,” the Fed’s survey concluded. “The deterioration was broadbased, with only a few sectors such as basic food production and pharmaceuticals appearing to be exceptions.”
Looking ahead, business people rated the prospects “for near-term improvement in economic conditions as poor, with a significant pickup not expected before late 2009 or early 2010.”
The survey summarizes information from businesses and others supplied to the Fed’s 12 regional banks. The information ” most of it anecdotal ” was collected on or before Feb. 23. It’s used by the Fed to get a better idea of what’s occurring at the ground level of the economy and will figure into discussions among Fed Chairman Ben Bernanke and his colleagues when they meet next on March 17-18.
Most economists expect the Fed will hold its key interest rate at a record low at that meeting as well as through the rest of this year to help revive the economy, which has been stuck in a recession since December 2007. The Fed also has said it will consider expanding existing relief programs or come up with new ones to extinguish the worst financial crisis since the 1930s.
The economy also has been battered by a collapse in the housing market and a lockup in lending that has made it difficult, and more expensive, for people 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.”
Hardest hit were factories that make goods related to the housing industry. Construction-related 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 report said.
Factories are getting hit by slower demand at home as well as overseas, where foreign customers are coping with their own economic troubles.
In the Cleveland region, overall factory production dropped about 25 percent compared with a year earlier.
Makers of computers, semiconductors and other information technology products saw further declines in production and orders in the Dallas and San Francisco regions.
A few bright spots: makers of pharmaceuticals and biotechnology products saw production gains. The Boston region reported sales growing at a double-digit pace for biopharmaceutical firms. The Chicago region reported strong demand for pharmaceuticals and the Richmond region noted temporary hiring at pharmaceutical companies.
Food processors and makers of certain chemicals also saw pickups in the San Francisco and Philadelphia regions. And airplane makers in the St. Louis region are planning to expand existing production, according to the Fed survey.