Recession eases a bit, Federal Reserve says

WASHINGTON —- The economy’s sharp slide eased in the late spring and hopes for future business activity improved, suggesting that the worst of the recession has passed.

A Federal Reserve snapshot of economic conditions issued Wednesday found that five of the Fed’s 12 regions said the “downward trend is showing signs of moderating.”

In addition, several regions said their expectations of future business activity have improved, although they don’t see a “substantial increase” through the end of the year.

Altogether, the assessments of businesses appeared to be slightly better than those in the previous report issued in mid-April.

Known as the Beige Book, the Fed survey is consistent with observations made by chairman Ben Bernanke and other central bank officials that the recession is loosening its strong hold on the economy.

Many analysts predict the economy is sinking at a pace of between 1 and 3 percent in the current quarter. That would mark a big moderation from the steep declines seen since last fall. The economy shrank at a pace of 6.3 percent in the final quarter of last year, and by 5.7 percent in the first three months of this year. It marked the worst six-month performance in 50 years.

The survey’s findings will figure into discussions when Bernanke and his colleagues meet on June 23-24. Economists have mixed opinions on whether the Fed will take additional action to bolster the economy at that time.

Some believe the Fed will increase its purchases of government bonds beyond the $300 billion already announced in a bid to drive down rates on mortgages and other debt. The goal: Spur Americans to buy more, which would aid the economy.

“We believe the Fed may have to move in this direction,” said Brian Bethune, economist at IHS Global Insight. “While financial market conditions generally have improved, the Fed is now confronted with a new set of challenges” as mortgage rates have increased sharply in recent weeks, he added.