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Fed Offers a Mixed Picture of the Economy : Finance: 'Beige book' summary will be looked at by policy-setting committee in July.

June 22, 1995|From Times Wire Services

WASHINGTON — Economic activity was generally brisk through mid-June, the Federal Reserve Board said Wednesday, but there are further signs that the expansion has been losing steam and that it is stronger in some places than in others.

"Economic activity remains at a high level across much of the nation, although there are indications of some softening in many reports from the 12 Federal Reserve districts," concludes the latest so-called beige book summary of the national economy prepared by the Federal Reserve Bank of Minneapolis.

The report is based on interviews with business people nationwide from May 1 through June 12. It will be one of the factors considered by the policy-setting Federal Open Market Committee when it meets July 5-6 to decide whether to change interest rates.

The San Francisco Fed reported that retail sales in its region were slow, that construction of single-family housing was below year-ago levels and that manufacturers of building materials reported declines. However, manufacturers of capital goods and electronics said demand was strong. Tourism in the area was also strong.

The central bank has not changed interest rates since Feb. 1, when it increased them for the seventh time in 12 months. Speculation is rife in financial markets that the Fed might lower rates with the mounting evidence that the nation's 4-year-old recovery is flagging.

Fed Chairman Alan Greenspan said Tuesday that the chances of a modest near-term recession are rising, but he would say only that he expects a "most engaging" session of the open market committee two weeks hence.

The latest beige book sounds a more cautionary note than did the previous one, issued May 10. That one said the economy was still growing but at a slower pace.

The Fed now says the expansion has become uneven, with the strength concentrated in the center of the country and the East and West coasts experiencing weakness.

On the positive side, it said there was little sign of inflation pressure from either wage or price increases and that overall, the rate of price rises was moderating.

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