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Wednesday, 11 September, 2002, 21:30 GMT 22:30 UK
US economy sees patchy growth
US economy graphic
Economic growth in the US has been "slow and uneven" in recent weeks according to the latest study of conditions by the US Federal Reserve.

The Fed's 'Beige Book', so-called because of the colour of its cover, found a mixed performance among retailers and "sluggish" activity in the manufacturing sector.

The survey provides an anecdotal picture of the US economy and will be used by the Fed when it meets on 24 September to discuss interest rates.

Analysts said the findings meant the Fed is unlikely to cut interest rates from their current level of 1.75%.

Some observers had speculated that the Fed may cut rates to prevent the economy slipping into recession again - the so-called 'double-dip' scenario.

Mixed picture

The Beige Book gathers together information from the 12 regional Fed bank districts.

"Most districts indicated slow and uneven economic growth, with mixed or scattered experiences across sectors of the economy," the Fed said.

Car sales were higher, but this was mainly due to aggressive incentive schemes being operated by the manufacturers.

Overall, retailers in different districts have had contrasting fortunes, but the Fed said they were "cautiously optimistic" about the coming months, "expecting sales to be flat or slightly up from their 2001 levels".

But the survey found that manufacturers were still having a tough time.

"On the whole, manufacturing activity was sluggish, with a good deal of variation by industry and region," the Fed said.

Most the districts also found little or no growth in employment.

No rate cut?

The findings were "not (pessimistic) enough to create anxiety that we're heading into a double-dip recession (but show) the economy is not in a fast take-off trajectory," said Tim O'Neill, chief economist at Bank of Montreal.

Economists at Lehman Brothers said the findings made a rate cut unlikely at the next Fed meeting.

"The Beige book suggested mildly weaker economic conditions than many Fed speakers have been suggesting," they said.

"Nevertheless, there were some signs of hope in the report so we expect that the Fed is likely to leave the Fed funds rate unchanged at the Sept 24th FOMC meeting until the economic picture clears."

The Beige Book made little impact on Wall Street, where dealers were preoccupied with the first anniversary of the terror attacks against the US.

The Dow Jones closed down 21.44 points at 8,581.17, a fall of 0.25%.


Economic indicators

Fears and hopes

US Fed decisons

IN DEPTH
See also:

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28 May 02 | Business
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