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Fed Reserve survey shows U.S. recession may be over

Economic activity is stabilizing or improving in the vast majority of the country, according to a new government survey, adding to evidence that the worst recession since the 1930s is over.

The Federal Reserve's snapshot of economic conditions backs predictions by Fed Chairman Ben Bernanke and most other analysts that the economy has started to grow again. In the Fed's Richmond region, which includes the Charlotte area, the Fed said there were “signs of improvement.”

In the survey released Wednesday, all but one of the Fed's 12 regions indicated that economic activity was “stable,” showed “signs of stabilization” or had “firmed.” The one exception was the St. Louis region, which continued to report that the pace of decline in economic activity appeared to be “moderating.”

Looking ahead, businesses in most Fed regions said they were “cautiously positive” about the economic outlook. The assessments of businesses on the front lines of the economy were brighter than those they provided for the Fed report in late July. At that time, most regions said the recession was easing its grip and some of them reported signs that activity was leveling off.

In Wednesday's survey, the Dallas region indicated that economic activity had “firmed.” The Fed regions of Boston, Cleveland, Philadelphia, Richmond and San Francisco mentioned “signs of improvement.” The Atlanta, Chicago, Kansas City, Minneapolis and New York regions described activity as “stable or showing signs of stabilization.”

Analysts predict the economy is growing in the current July-September quarter at anywhere between 3 and 4 percent. Most of that growth should come from more spending from businesses, which had slashed investments – often by double-digits – during the recession.

Consumer spending, however, is expected to turn up only because of the binge-buying of automobiles generated by the short-lived Cash for Clunkers program. Buyers were given cash rebates to trade in less efficient gas guzzlers.

The stock market extended its gains to a fourth day, with the Dow Jones industrial average up 50 points by the closing bell.

The Fed's survey found that the majority of regions did report that the government's Clunkers program “boosted traffic and sales.” But aside from brisk businesses at auto dealerships, other merchants struggled. Consumer spending remained “soft” in most Fed regions.

Manufacturers in most regions, meanwhile, reported “modest” improvements.

Although the ailing residential real-estate market is still weak, it also flashed signs of improvements. The commercial real-estate market, however, continued to drag. Demand for space remained weak and construction fell again in all regions.

On the jobs front, employment conditions “remained weak” in all the Fed regions.

- article from the Charlotte Observer