Region's economy is 'sluggish,' Fed says Retailing and housing are still lackluster

October 24, 1991|By Thomas Easton | Thomas Easton,New York Bureau of The Sun

NEW YORK -- "Weak," "lackluster," "sluggish" -- once again, these were the words the Federal Reserve used to describe business conditions in the region from Maryland to South Carolina during September and early October.

In its periodic update of conditions throughout the country, the Fed said that the economy is "weak or growing slowly." Retail pTC sales remain poor, and improvement in manufacturing output, recently one of the few bright spots in the economy, is less robust, the report said.

The report, based on surveys by the Fed's 12 regional banks and colloquially known as the "beige book" because of the color of its binder, is issued several days before meetings of the Fed's key Open Market Committee, which determines monetary policy. The group is scheduled to meet Tuesday.

Surveys of the mid-Atlantic to Southern coastal region, conducted by the Federal Reserve Bank of Richmond, Va., suggest business conditions consistent with the national economy, hovering between recovery and contraction but not decisively in either.

Demand for consumer and commercial loans was "lackluster," the Fed reported, suggesting again that the "credit crunch" may be as much a result of dampening willingness to spend or invest as an unwillingness of financial institutions to lend. All of the banks surveyed had lowered their prime lending rate.

Both manufacturers and retailers expressed optimism about the prospects for the next six months, but they were less optimistic than they were when the last beige book was released a month ago. Retailers reported that business, already soft, had declined.

Manufacturers in the Richmond district were notably more pessimistic about the overall economy than counterparts in other regions.

But when describing their own business, the area's manufacturers were bullish about expansion. Among the areas expecting further gains are the district's ports, where officials anticipate an increase in exports and stable imports.

Housing sales were "sluggish," largely because of concerns from potential buyers about jobs and income, but several lenders and real estate analysts reported that lower interest rates had begun to spur activity.

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