US economic activity 'deteriorated further' in February, dampening prospects for a quick recovery from recession, the Federal Reserve said in its Beige Book report tonight.
The report, to be used at the upcoming meeting of Fed policymakers March 17-18, said the troubles were broad-based, citing weak consumer spending, tight credit and further declines in the factory sector.
'Looking ahead, contacts from various districts rate the prospects for near-term improvement in economic conditions as poor, with a significant pickup not expected before late 2009 or early 2010,' the report said.
The Beige Book said consumer spending, a key driver of the economy, 'remained sluggish, although many districts noted some improvement in January and February compared with a dismal holiday spending season.'
It cited declines in travel and tourist activity and 'a wide range' of services, amid 'substantial job cuts'. In manufacturing, most Fed districts reported 'steep declines in activity in some sectors and pronounced declines overall.'
The property market, which set off the current economic slide, was 'largely stagnant, with only minimal and scattered signs of stabilisation emerging in some areas, while demand for commercial real estate weakened significantly.'
In the financial sector, which has been struggling with massive losses, many banks saw 'further drops in business loan demand, a slight deterioration in credit quality for businesses and households, and continued tight credit availability,' the Beige Book said.
The US economy contracted at a whopping 6.2% pace in the fourth quarter of 2008, based on the most recent government estimate. Some analysts say the downturn may be even worse in the first quarter of 2009, with the crisis easing late this year or early 2010.
