Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: THURSDAY, June 22, 1995 TAG: 9506220050
SECTION: BUSINESS PAGE: B-8 EDITION: METRO
SOURCE: Associated Press
DATELINE: WASHINGTON LENGTH: Medium
A survey of business conditions by the Federal Reserve's 12 regional banks said Wednesday there are signs of sluggishness in many corners of the economy.
The report, based on a survey concluded last week, said key segments of the economy that respond most readily to higher interest rates are slowing dramatically. ``Sales remain depressed'' in the auto industry, and home-buying is slower than last year, the report said.
``Activity in interest-sensitive sectors generally remains well below year-earlier levels and continues to decline in some areas,'' the survey found. ``There are indications of some softening in many reports from the 12 Federal Reserve districts.''
On the bright side, the survey found only mild inflationary pressures.
Greenspan told a group of economists in a New York City speech Tuesday evening that there is an increased risk of a ``modest, near-term recession.'' But he stressed that the economic data so far are inconclusive, leaving open the possibility of a quick recovery later this year.
Analysts said economic conditions are so uncertain that it is practically impossible to predict whether the Fed will cut interest rates next month when the policy-making Federal Open Market Committee meets.
``I don't think we're headed for a recession at all,'' said Eugene Sherman of the Wall Street firm, M.A. Schapiro & Co. Inc. ``But the problem everybody has is that the data we're looking at is ambiguous. We don't have any certainty.''
Sherman expects that gross domestic product, measuring the output of all goods and services produced in the nation, declined in the current quarter, which ends next week. He predicted a modest rebound in the third quarter and stronger growth in the last three months of the year.
Others are less optimistic.
David Jones of Aubrey G. Lanston & Co., a government securities dealer in New York who was in the audience for Greenspan's speech, came away with the impression that the economy's weakness may last for a while.
Greenspan was ``worried that the correction will be deeper and longer than earlier thought,'' Jones said. ``He was somewhat uneasy that the pronounced slowing could persist.''
A recession usually is defined as at least two straight quarters of declining gross domestic product. The last time the economy contracted was in the first three months of 1991 as the nation was about to emerge from a recession that began the year before.
The economy grew at a 5.1 percent annual rate in the last three months of 1994 and slowed to 2.7 percent in the first quarter this year.
by CNB