Fed: Economy shows signs of stabilizing in some regions

WASHINGTON -- The economy finally is beginning to show signs of stabilizing in parts of the country, bolstering hopes for a broader recovery this year.

The Federal Reserve's "Beige Book" report on economic conditions issued Wednesday showed that the economy remains fragile. But it said that in many of the 12 Federal Reserve Bank districts, the recession is easing and economic activity had begun to stabilize in late June through mid-July.

Four Fed regions — New York, Cleveland, Kansas City and San Francisco — pointed to "signs of stabilization," the survey said. Two regions — Chicago and St. Louis — reported that the pace of economic declined appeared to be "moderating."

Five other regions — Boston, Philadelphia, Richmond, Atlanta and Dallas — described activity as "slow," "subdued" or "weak." Only one region — Minneapolis — indicated that its downward slide in economic activity had worsened.

Combined, the assessments of businesses on the front lines of the economy appeared to be brighter than those provided for the last Fed report, in mid-June.

The observations in the Fed survey are consistent with an assessment last week by Fed Chairman Ben Bernanke: that the economy should start growing in the second half this year, ending the longest recession since World War II.

Many analysts believe the recession, which began in December 2007, eased considerably in the April-to-June quarter. They're forecasting that the economy shrank at a 1.5% annual rate in the second quarter.

That would mark a big improvement from the 5.5% drop in the first three months this year. The government will release second-quarter GDP results Friday. Many economists also believe the U.S. could start growing as soon as the current quarter.

The Beige Book's findings will figure into discussions when Bernanke and his colleagues meet next on Aug. 11-12. The Fed is expected to keep a key bank lending rate at a record low near zero to help nurture a recovery. Economists say the Fed is likely to hold rates at record low levels the rest of this year.