Fed says spending is now sluggish

Washington -- The U.S. Federal Reserve Beige Book declared Wednesday that prospects for a near-term recovery in the economy remained poor.

With 10 of the 12 bank districts reporting deteriorating conditions January through February, "a significant pickup (cannot be) expected before late 2009 or early 2010," the report said.

In the two bank regions not reporting contractions -- Chicago and Philadelphia -- the regional economies were described as "remain(ing) weak."

"The deterioration was broad based, with only a few sectors such as basic food production and pharmaceuticals appearing to be exceptions," the report said.

Critically, consumer spending, which drives two-thirds of the economy, "remained sluggish on net," the report said.

The Fed noted "dismal holiday spending" and declines in travel. In addition, the housing market showed "minimal and scattered signs of stabilization ... while demand for commercial real estate weakened significantly."

On the inflation front, weak demand and falling energy prices kept most prices in check, the report said.

In retail, discount stores fared better than department stores as consumers moved from luxuries "toward basic necessities."

Saddled with financial stress, consumers are even making fewer trips to doctors' offices "attributed in part to a drop in elective procedures."

Copyright 2009 by United Press International.