- The Washington Times - Thursday, March 6, 2003

The Federal Reserve said yesterday that economic activity throughout the country remained subdued in January and February as concerns about a war in Iraq slowed spending by consumers and businesses.
Perhaps epitomizing the mood, the central bank noted a terrorism-related spurt in the sales of duct tape, plastic and other hardware goods.
The Fed's latest survey of business conditions, compiled from information received from its 12 regional banks, showed that most areas of the country had seen little pickup in activity since the last survey in early January.
The central bank said that business spending, the key missing ingredient in the economic recovery, continued to lag in the early part of the year.
"Business spending remained very soft as geopolitical concerns and uncertainty over the strength of demand continued to constrain spending and hiring plans," the Fed said in its latest survey, known as the Beige Book after the color of its cover.
Fed policy-makers will use the economic reports when they meet March 18 to consider changing interest rates.
Most economists believe the Fed, which has pushed a key interest rate to a 41-year low, will leave rates unchanged and will wait and see whether the economy will regain momentum once the uncertainty over a war in Iraq is resolved.
"Growth in economic activity remained subdued in January and February," the Fed report said. "Only a few districts reported any notable changes from the last Beige Book."
The report said the Federal Reserve bank in Richmond reported that economic activity "grew modestly" over the past two months, while the bank in Kansas City, Mo., noted "some signs of strengthening."
However, the glimmers of improvement were few, and balanced against gloomier signs such as a report by the New York Fed that conditions had "generally weakened" over the past two months.
"Many reports indicated that geopolitical and economic uncertainties were constraining consumer and business spending and tempering near-term expectations," the Fed said.
The central bank found that consumer spending, which was the one major force lifting the country out of the 2001 recession, was weak at the start of the year, reflecting in part a drop-off in demand for new automobiles, which along with housing had been bolstered by low interest rates.
Sales over the Presidents Day weekend also were hurt by a major snowstorm in the Northeast that depressed buying in the New York, Philadelphia and Richmond Fed districts.

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