Fed: Economy Weaker, Outlook Dim

Central Bank Sees Recession Ripple Effect, Signals Interest Rates Will Stay At Record-Low Levels

(AP)  The U.S. economy started the new year on weaker footing as recession-shocked Americans retrenched further, forcing retailers to ring up fewer sales and factories to cut back production.

The Federal Reserve's new snapshot of business conditions nationwide, released Wednesday, suggested the country's economic picture has darkened over the last two months. The outlook appears equally dim.

"Overall economic activity continued to weaken across almost all of the Federal Reserve's districts," the report concluded.

To help brace the economy, Fed Chairman Ben Bernanke and his colleagues have signaled that they will leave a key interest rate at record-low levels for some time.

In an unprecedented move last month, the Fed ratcheted down its rate to hover between zero and 0.25 percent. The Fed will keep rates in that range at its next meeting on Jan. 27-28 and probably for much - if not all - of this year, economists predict. The Fed also has pledged to use other unconventional tools to revive the economy.

The recession, which just entered its second year, already is the longest in a quarter-century and appears likely to be the longest downturn since World War II.

Most retailers reported "generally negative" holiday sales and are cautious about sales prospects in the months ahead, according to the Fed report based on information collected between late November and Jan. 5.

"Many retailers in the Philadelphia, Atlanta, Kansas City and Dallas districts expected continued weakness or sluggish sales," the report said. "Expectations were mixed in the Cleveland district, and retailers in the Boston district were watchful."

This week alone, regional department store chain Gottschalks Inc. put itself up for sale and said it had filed to reorganize in a Chapter 11 bankruptcy, discount clothing chain Goody's Family Clothing also filed for Chapter 11 bankruptcy protection, and luxury department store retailer Neiman Marcus Group Inc. said it was cutting about 375 jobs.

Consumer spending - which includes retail sales - is a major shaper of national economic activity. But job cuts, sinking home values and cracked nest eggs have made American consumers wary of spending.

In a separate report Wednesday, the Commerce Department said retail sales tumbled 2.7 percent in December, marking a record six straight months in which sales have declined. For all of 2008, sales dipped 0.1 percent, the first annual drop on government records going back to 1992.

At factories, "activity continued to fall" in most Fed districts, with "declines reported across a wide range of industries," the Fed reported.

Many manufacturers expected more cutbacks in the future. "Boston, Philadelphia, Cleveland, Minneapolis, Chicago and Kansas City mentioned reductions in capital spending or plans to reduce capital spending in 2009," according to the report.

Activity in the services sector of the economy also declined in most Fed regions. Transportation, travel and tourism-related services were among the industries hit.

Meanwhile, the housing market fell deeper into a rut in and commercial real-estate markets deteriorated in most Fed regions.

With companies seeing customers' appetites sag, employers throttled back hiring, the Fed report said. They axed jobs, cut workers' hours, froze workers' pay or reduced compensation.

The nation's unemployment rate bolted to 7.2 percent in December, a 16-year high, the government reported last week. For all of last year, a staggering 2.6 million jobs were eliminated, the most since World War II.

The Fed report, based on information supplied by the Fed's 12 regional banks, will figure into discussions by Bernanke and his colleagues later this month when they assess economic and financial conditions.

[unlresources]

What''s Bernanke''s cut for endorsing the Obama stimulis plan? All this spending hasn''t done anything for the economy other than dig a deeper deficit hole to be passed on to the next generation of tax payers. What''s next my kids-kids-kids dismal future to pick up this tab? Thanks Washington, just add another 0 to on-going figure so we can all know what it feels like to be over a trillion in debt!!!!

[wardoglrs]

"If tyranny and oppression come to this land it will be in the guise of fighting a foreign enemy." Thomas Jefferson

"The strongest reason for the people to retain the right to keep and bear arms is, as a last resort, to protect themselves against tyranny in Government." -- Thomas Jefferson


"Control oil and you control nations; control food and you control the people."
Henry Kissinger (ex U.S. Secretary of State and ongoing agent for the ruling class. Living. Quote 1970)

%u201CWe will have world government whether or not we like it. The only question is whether world government will be achieved by conquest or consent.%u201D
James Paul Warburg (monopoly banker in testimony before the US Senate Committee on Foreign Relations. Warburg was an agent of the Rockefeller-JP Morgan-Rothschild banking bloc and son of Paul Warburg, chief architect of the %u201CFederal Reserve%u201D Corporation, an unconstitutional private bank monopoly set up for cartel hegemony. February 17, 1950)

%u201CThe danger is not that a particular class is unfit to govern. Every class is unfit to govern%u201D
Lord Acton

"Neither the wisest constitution nor the wisest laws will secure the liberty and happiness of a people whose manners are universally corrupt." Samuel Adams.


%u201CUnfortunately, nothing will preserve [liberty] but downright force. Whenever you give up that force, you are inevitably ruined.%u201D Patrick Henry

[cg37102006]

i dont usually subscribe to hype and fear, but I think the pronouncements about our dire economic shape are true. it is a perfect storm of things conspiring to keep us down. unsustainable housing boom has busted. over leveraged companies finally having to pay their bills. federal, state and local government up to their eyeballs in debt. banks and financial institutions hoarding cash instead of lending it out just to stay in business. i dont see any kind of real recovery until 2010, UNLESS, the stimulus package puts a couple grand in each American''s pockets quickly. I mean like within the next month or two. Otherwise we are probably headed toward 10% unemployment, at the brink of going over the edge into the depression abyss.

[otiswestfall]

I believe I have a good description of America. Think of America as a barge full of people drifting down the Niagara River. Some people are a little worried. Others have decided that they won''t worry no matter what. Some people are concerned about the very loud unidentified sound coming from the direction they are headed. Other people on the barge say they are not going to give the loud sound the satisfaction of causing them any discomfort.

[brianbwb-2009]

"Blame bush all you want. it was all of em that sold us out. it''''s been building up since before most of you were born. and us vs them is a no win situation. you all voted for it. have fun living in it." Posted by jizzumjim

Absolutely correct, anyone playing stupid games blaming the most recent politicians of their opposite party are fools.

The official starting date of the current depression is August 19, 1972, when Nixon sold the treasury gold on the open market, and floated the dollar on oil, the economy has gone downward ever since, the current dollar being worth around 18% of its 1972 value.

No president, Democrat or GOP has been able to stop the slide, because they are all afraid to take the next logical step, peg the dollar to an amount of actual work, and only disburse it when the work has been done.

[brianbwb-2009]

Posted by getoffmine1

Look around you in America, there will be riots in the streets within the next few years, and the disgruntled factory workers have no farms to go back to.

Do not delude yourself that the US economy will be a significant player much longer, the Chinese are now making agreements with other nations around the world, when they can improve their Q.C., and get their manufacturing up to spec, the US economy will quickly become totally irrelevant, and that is happening faster than you are aware.

Why else do you think that US companies are closing plants here and opening them there? Not just for cheap goods to sell to increasingly jobless and poor Americans, but cheap goods to sell to the world.

[brianbwb-2009]

"Your political gamesmanship really means nothing at this point. All Americans need to circle the wagons and pray and work together for a solution to this crisis." Posted by MindURownBiz

A nice idea, but there is a problem, in that to a certain group of us, who call themselves conservatives, but in reality are fascists, the only way they will "work together" is if we accept their repugnant ideology, otherwise they will obstruct the progress.

You can circle the wagons, but with bandits and outlaws inside the circle, you are better off on your own.

[jizzumjim]

blame bush all you want. it was all of em that sold us out. it''s been building up since before most of you were born. and us vs them is a no win situation. you all voted for it. have fun living in it.

[getoffmine1]

http://www.time.com/time/business/article/0,8599,1871014,00.html?xid=rss-topstories


"The Last Pillar of the Chinese Economy Falls"

[getoffmine1]

Your political gamesmanship really means nothing at this point. All Americans need to circle the wagons and pray and work together for a solution to this crisis.


Posted by MindURownBiz at 09:43 AM : Jan 15, 2009

You are exactly right, and there is a silver lining. We in the U.S. will come out of this before anyone else and we need to make sure we stay on top once and for all.
China, who has cheated and stolen it way to become a major economic player is now in worse shape then we are. Experts are predicting their recession will be much deeper and longer then ours. There are riots in the streets and the factory workers the govt'' exploits are going back to their villages to try and grow food to survive.
The U.S. needs to cut off trade with China. If and when they start to bounce back we need to make sure the U.S. is not a market for their exports.
This will keep them down where they belong. I always say they are really just a 3rd world country.