- The Washington Times - Wednesday, March 3, 2004


Factories hummed and consumers kept cash registers busy in the first two months of this year, fresh evidence that the economic recovery is moving ahead, according to a Federal Reserve report yesterday.

“Economic activity continued to expand in January and February,” the Fed said in its latest survey of business conditions across the country.

However, on the jobs front, “employment has been growing slowly in most Federal Reserve districts,” the report said.

Factory activity rose in 11 of the 12 regional Fed districts, good news for America’s manufacturers who were hardest hit by the 2001 recession and have struggled to get back on firm footing. In the Fed’s Cleveland region, factory activity didn’t rise, but rather held steady, the Fed survey said.

Even with the pickup in factory activity, manufacturers have lost 3 million jobs since July 2000. That’s the month factory employment peaked as the economy was enjoying a record-long expansion.

The lackluster jobs climate is a sore spot for President Bush, and the Democrats are trying to use it as an election-year issue.

“I don’t think our country has an economic strategy,” said Sen. Hillary Rodham Clinton, New York Democrat, who urged the administration to take steps to reverse the loss of manufacturing jobs.

In the Federal Reserve report, consumer spending on general merchandise rose in most of the Fed’s regions except for St. Louis, which reported a slight decline.

Strong or strengthening sales were reported for the New York, Richmond and the Dallas regions. Sales growth was moderate in the Boston, Philadelphia, Chicago, Minneapolis, Kansas City and San Francisco districts. Retailers in Cleveland said sales met or exceeded expectations. In the Atlanta region, sales moderated a bit in February but were up from the same month a year ago, the Fed said.

However, it said that nearly all regions reported slower auto sales in January and February compared with a year ago.

Activity in the service sector also expanded in January and February. Boston and St. Louis, for instance, saw stronger demand for information-technology services.

The report, dubbed the Beige Book for the color of its cover, will be used as a basis for discussion when central bank policy-makers meet March 16.

Overall, “it’s a good report card for the economy,” said Stuart Hoffman, chief economist at PNC Financial Services Group.

Most economists, including Mr. Hoffman, expect the rate-setting Federal Open Market Committee to hold rates steady at a 45-year low of 1 percent at the March meeting.

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