Fed Report Shows Signs Economy's Stabilizing

Washington, DC, July 30, 2009--The economy is showing signs of stabilizing in some regions of the country, giving hope of a broader-based recovery this year.

The Federal Reserve's Beige Book report, a snapshot of economic conditions issued Wednesday, found that most of the Fed's 12 regions indicated either that the recession was easing or that economic activity had "begun to stabilize, albeit at a low level."

The economy remains fragile. But the fact that some Fed regions reported signs of activity beginning to level out raises hope that the recession, which started in December 2007, is drawing to a close.

Four Fed regions -- New York, Cleveland, Kansas City and San Francisco -- pointed to "signs of stabilization," the survey said. Two regions -- Chicago and St. Louis -- reported that the pace of economic declined appeared to be "moderating."

Five other regions -- Boston, Philadelphia, Richmond, Atlanta and Dallas -- described activity as "slow," "subdued" or "weak." Only one region -- Minneapolis -- indicated that its downward slide in economic activity had worsened.

Combined, the assessments of businesses on the front lines of the economy appeared to be brighter than those they provided for the previous Fed report in mid-June.

Worsening joblessness remains a major concern. More than 90 percent of the nation's largest metropolitan areas saw their unemployment rates climb in June from the previous month, the Labor Department reported Wednesday. Some of the biggest increases hit college towns, where the annual summertime exodus of students causes bars, restaurants and other businesses to cut staff.

The U.S. jobless rate, which hit 9.5 percent in June, is expected to rise to 9.7 percent when the department reports the July rate next week.

In the Fed report, manufacturing activity showed "some improvement" in the Richmond, Chicago and Kansas City regions.

In the factory sector, reports overall suggested that activity "remained subdued" but "slightly more positive" than in the previous survey.