The White House this week ridiculed Newsweek Magazine's cover that declared The Recession is Over, but the Federal Reserve reported Wednesday that, if the recession isn't over, it's getting close.
In its so-called Beige Book, the Fed concluded that the economy is no longer in a free-fall, and in fact, some regions of the country are starting to show signs of stabilization. The report is based on data collected from businesses across the country.
The recession is nearing its end. But that doesn?t mean that every sector has turned the corner, said Joel Naroff, chief economist for Naroff Economic Advisors, in Holland, Pa. Some industries are starting to see some pick-up in demand but others will have to wait. In addition, any improvement is likely to be uneven and sluggish.
The beige book covered the six-week period since the last book on June 10 and was prepared in advance of the August 11 and 12 meeting of the Federal Open Market Committee, which sets interest rates.
Analysts say they don't expect the FMOC to make any changes, keeping a key interest rate close to zero. The Fed may also buy billions of dollars in government and mortgage-related debt to try and keep mortgage rates low.
While the beige book pointed to hopeful signs, it also contained a number of sobering observations. Commercial lending is still drying up, foot traffic in stores is slow and fewer business people are traveling.
However, a separate report Wednesday suggested business spending on big ticket items is staging something of a comeback. The Commerce Department reported that orders for durable goods, fell sharply because of lower sales of cars and airplanes. But when that volatile sector is excluded, new orders rose a surprising 1.1 percent.
There were solid increases in demand for primary metals, machinery and electrical equipment, Naroff said. The best measure of corporate spending, nondefense, nonaircraft capital goods orders, rose solidly for the second consecutive month. Yes, there was some weakness in computers, communications equipment, motor vehicles and fabricated metals, but even in some of those sectors there is hope.
Naroff said as Chrysler and GM begin to move on from bankruptcy, the economy is likely to see production pick up as the new models are assembled. For the past few months, he says, there has been little activity as the firms have tried to reduce inventory.