US Economy Still Recovering Slowly - Fed's Beige Book

The U.S. economy's recovery continued at the end of 2009, spreading to more parts of the country, but remains too weak to bring down unemployment, the Federal Reserve said in a report Wednesday.

In its latest beige book, the Fed said economic activity was improving slightly as 2010 started, but remained at a "low level" especially due to weakness in labor and commercial real estate markets.

The U.S. central bank said 10 districts reported some increased activity or improvement in economic conditions, while the remaining two--Philadelphia and Richmond--reported mixed conditions. In the previous survey published Dec. 2, the Fed said eight districts had shown improvements.

Federal Stimulus Plan Information

Our country faces its most serious economic crisis since the Great Depression.

With a new government in office, several economic reforms have been put into action to help revitalize the economy. This Federal Stimulus Plan aims to:

• Create new good jobs in America

• Provide relief for struggling families

• Increase assistance available to homeowners

• Provide assistance for business owners

• Increase funding for programs like Government Grants to help US citizens

Low Japan Interest Rates May Persist Until 2011

Japan's low interest rates may persist until next year because of a poor outlook for the world's second-largest economy, a senior official from the Bank of Japan said Monday.

"It's a possible scenario" because current forecasts for the Japanese economy are weak, associate director-general of the BOJ's International Department, told Dow Jones Newswires on the sidelines of a forum.

Nakagawa also said an appreciating yen helps sustain demand for Japanese Government Bonds, as a strengthening currency discourages Japanese households from investing in foreign assets and instead helps banks draw more yen-denominated savings deposits.

Credible Fiscal Consolidation Key For Confidence

Governments around the world need to address excessive budget deficits in order to reassure investors, as the global economic recovery continues, European Central Bank president.

Speaking in his capacity as chair of the Global Economy Meeting that brings together central bankers from major industrial and emerging market economies, "it seems to me that, at the global level, there is a confirmation of the progressive normalization of the economy," but cautioned that challenges remain.

Philadelphia Federal Reserve Bank President Richard Plosser on the wires

Believes the economic recovery will be sustainable as stimulus winds down. As the US economy comes out of the recession it is doing so with moderate growth and low inflation. Full economic recovery in the financial markets will take time.

He expects economic growth to be between 3 and 3.5 % over the next 2 years. On interest rates the Fed will need to raise rates as the economy improves.

On house prices the market seems to have stabilized but there could be some risk in the Commercial Real Estate market.