City A.M. Reporter
THE Federal Reserve said yesterday the pace of the recession has stabilised in most areas of the US, in a report that pointed to protracted job market weakness even as the economy transitions to recovery.<br /><br />Labour markets across the country were “extremely soft,” with little upward pressure on wages, the Fed said in its Beige Book survey of economic conditions up until 20 July.<br /><br />Wages and compensation were steady or falling in most areas, said the Fed. Employers reported different methods of cutting pay in addition to, or instead of, freezing or lowering wages, it added. Stocks slipped on the report’s suggestion that the jobs picture may be gloomy for a while.<br /><br />“Consumer spending, residential and commercial real estate, tourism, labour markets ... soft, soft, soft, soft, and soft,” said Jennifer Lee, an economist with BMO Capital Markets Research. She added: “I expected the overall tone to be a little less subdued.”<br /><br />The Fed has slashed benchmark interest rates to near zero and pumped hundreds of billions of dollars into the economy to counter the worst financial crisis since the Great Depression of the 1930s.<br /><br />Fed officials say they expect growth to return in the second half of the year, but warn they expect the recovery will be sluggish and high unemployment will persist for a while.<br /><br />The Fed has promised to keep benchmark rates exceptionally low for an extended period and to keep its policies in place to support the fragile turnaround.<br /><br />Factory activity was depressed in many areas although the Fed said some districts saw signs of modest improvement.