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September 19, 1991 - Image 7

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Publication:
The Michigan Daily, 1991-09-19

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The Michigan Daily-Thursday, September 19,1991 -Page 7

Federal Reserve reports nation's

economy

slowed by decreased spending, construction

WASHINGTON (AP) - The
national economy, rather than
bouncing strongly out of the reces-
sion, is beset with a host of prob-
lems from sluggish consumer
spending to a virtual standstill in
commercial construction, the Fed-
eral Reserve reported yesterday.
The Fed's latest survey of na-
tional business conditions said that
the recovery "continues to be un-
even across the country" with a re-
bound in manufacturing, which is
one of the few bright spots.
Some private economists were
more blunt, saying the Fed report
depicted a moribund economy that
could easily slip back into recession.
Even economists who are not fore-
casting a so-called "double dip" re-
cession are predicting that the re-
covery will be one of the weakest on
record.
The Commerce Department re-
ported that construction of new
homes and apartments edged up a
slight 0.6 percent in August while
the number of building permits -
considered a good sign of future ac-
tivity - fell for the first time since
February, declining 4.6 percent.
The Fed survey found fewer than
half of the Fed's 12 regions were re-
porting further increases in housing
sales and construction in the late
summer after an initial rebound in
the spring.
The American Bankers Associa-
tion said that the percentage of con-
sumer loans at least 30 days past due
rose to 2.73 percent in the April-

June quarter, the second highest
level in more than a decade.
Analysts said this report showed
that debt-strapped consumers faced
with weak income growth in a re-
cession were having increasing trou-
ble paying off their bills and were
unlikely to be able to begin spend-
ing again anytime soon.
In the new report, the Fed found
that most regions reported disap-
pointing spending with back-to-
school sales described variously as
"weak, slower than expected or dis-
appointing."
"As yet, there is little sign of a
sizable rebound in consumer spend-
ing that will contribute to a
strengthening business recovery,"
the Fed concluded.
The Fed's review of business
conditions, known as the "beige
book," is compiled from reports
from the 12 regional banks. The
document is prepared eight times a
year and serves as a guide to policy
makers when they meet to set inter-
est rate policies. The next session of
the Federal Open Market Commit-
tee will be Oct. 1.
The central bank last week con-
ducted another round of credit eas-
ing including pushing the discount
rate, the interest it charges on bank
loans, to 5 percent, its lowest level
in 18 years.
Many analysts said the view in
the beige book would bolster the'
arguments of the Bush administra-
tion that the Fed needs to go even
further to cut rates to bolster the

economy before next year's presi-
dential election.
The Fed survey found that the
strongest sector in the economy at
present is manufacturing, with gains
led by rising export sales.
The report said strength at U.S.
factories had been particularly no-
ticeable in the Chicago and Cleve-
land regions, where the upturn had
been led by rising automotive and
appliance output, which had sup-
ported a gradual rise in steel output.
The Fed said not all districts
have shared in the manufacturing
upturn. Two notable exceptions are
the Boston and San Francisco re-
gions.
Nearly all of the districts re-

ported that demand for bank loans
has been flat both for business and
consumer loans. Demand for mort-
gage loans has declined even though
mortgage rates have been falling,
many Fed regions reported.
The picture in the farm sector
was mixed, according to the report.
Although record cotton harvests
were expected in the St. Louis and
Dallas regions and bumper rice
crops were predicted in St. Louis,
other regions were being hurt by ad-
verse weather.
"Hot, dry weather in much of
the country has hampered farm out-
put, especially corn," the Fed survey
found.

Bush 'fed up
President Bush gestures as he speaks to a crowd at Salt Lake City
International Airport yesterday afternoon. Earlier in the day, Bush
announced that he was "plenty fed up" with Saddam's resistance to
U.N. helicopters in Iraq.

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Soviet Georgia govt arrests dissident

TBILISI, U.S.S.R.
Georgian authorities
another dissident leader

(AP) -
arrested
yesterday

after president Zviad Gamsakhurdia
urged his supporters to rid the re-
public of forces trying to unseat
him.
Georgi Haindrava, a famed
filmmaker who fought alongside
Gamsakhurdia for Georgian inde-
pendence, was seized after midnight
on Rustaveli Avenue, a sight of po-
litical rallies the last two weeks.
Hours later, police abandoned ef-
forts to remove heavy concrete
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..ANNOUNCEMENTS>
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blocks that form one of the two
makeshift barriers defended by
young protesters across the wide
street.
About 100 police militia offi-
cers showed up with a crane, but
protesters climbed on the blocks
and stood peacefully for several
hours until the officers left.
Haindrava is best known for his
documentary about an April 9, 1989
pro-independence rally in Tbilisi in
which Soviet troops killed 20 peo-
ple with shovels and gas.
The incident caused a furor,

raised doubts about president
Mikhail Gorbachev's proclaimed
policy against using force to stifle
dissent and brought many Georgians
into the battle for independence.
Haindrava was held on a three-
day preliminary detention order.
Georgi Chanturia, the National
Democratic Party leader, was ar-
rested 24 hours earlier under the
same decree, according to party
spokesperson Guram Chahvadze.
Chanturia's wife, Irina
Sarishvili, was detained with him
after the Aeroflot flight to

Moscow they were on turned
around after takeoff. A third party
official, Vakthang Talahadze, was
released without explanation
Tuesday.

Haindrava belongs1
National Congress, which
number of parties.

to the
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