Feds find few signs of economic recovery

The slumping US economy is showing only spotty signs of recovery, with overall conditions still weak, the Federal Reserve said in its Beige Book report Wednesday.

The central bank said reports from its 12 districts from mid-April through May "indicate that economic conditions remained weak or deteriorated further during the period."

Echoing a comment from its April Beige Book, the Fed said that "five of the districts noted that the downward trend is showing signs of moderating."

Additionally, Fed officials indicate that anecdotal reports from a number of regions suggest that "expectations have improved," but that contacts in the regions "do not see a substantial increase in economic activity through the end of the year."

The report, to be used at the next Federal Open Market Committee meeting June 23-24, suggests the central bank will maintain its aggressive policy aimed at jolting the economy out of recession with ultralow interest rates and a massive amount of liquidity pumped into the financial system.

The US economy shrank at a 5.7 percent pace in the first quarter, based on the latest official estimate after a brutal 6.3 percent slump in the fourth quarter.

The Beige Book said manufacturing activity "declined or remained at a low level across most districts" but that some districts "reported that the outlook by manufacturers has improved somewhat."

Retail spending, the key driver of economic activity, "remained soft." according to the report, which said "consumers focused on purchasing less expensive necessities and shied away from buying luxury goods."

"New car purchases remained depressed, with several districts indicating that tight credit conditions were hampering auto sales," the report added.

Some areas reported "an uptick in home sales, and many said that new home construction appeared to have stabilized at very low levels," it added.