US economy worsened since January: Federal Reserve

March 5th, 2009 - 4:12 am ICT by IANS  

Washington, March 5 (DPA) The US economy shrank in nearly all parts of the country in the first two months of the year, the Federal Reserve said Wednesday in the latest sign of a deepening US recession.
Ten of 12 US regions reported “weaker conditions or declines in economic activity” since the start of 2009, according to the central bank’s Beige Book, which is compiled from local business reports around the country.

Philadelphia and Chicago were the only exceptions. Business in those two regions “remained weak” but had not dropped further in the last two months.

The Fed said the contraction was spread across all sectors of the economy. The housing market at the heart of the downturn “remained largely stagnant,” while businesses and households were still having a tough time getting loans from banks and other investors.

Consumer spending, which makes up about two-thirds of the US economy, had improved slightly in some regions compared to a “dismal holiday spending season,” the Fed said.

The US economy shrank 6.2 percent in the final three months of 2008 - the most in a quarter-century - and a similar contraction is expected in the first quarter of this year.

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