Recession Gets Worse

From Connor Dougherty and Soudeep Reddy at the Wall Street Journal:
The U.S. recession grew deeper and wider in January and February as consumers and companies continued to cut back and counted on little improvement before the end of the year, a Federal Reserve survey of regional economic conditions found.
"Looking ahead, contacts from various districts rate the prospects for near-term improvement in economic conditions as poor, with a significant pickup not expected before late 2009 or early 2010," said the Fed's "beige book," a survey from the 12 regional Fed banks.
The report, prepared ahead of the March 17-18 meeting of Fed policy makers, found that nearly every pillar of the economy has been shaken by the recession. Fed districts reported "steep declines" in manufacturing in addition to weak farming conditions and a substantial slowdown in natural-resources extraction, as demand for even basic products and industrial building blocks collapsed in the U.S. and overseas.
The Fed said 10 of its 12 regions reported worsening economies. The exceptions were the Philadelphia and Chicago districts, where the economy "remained weak."
Fed policy makers have largely written off any hope that the economic downturn will end in the first half of this year. "We're in the ugliest part right now," Charles Plosser, president of the Federal Reserve Bank of Philadelphia, said in an interview Wednesday. "I'm anticipating that at least in the second half of the year we might see some inklings of positive growth, but it's nothing to get excited about."
Even a second-half recovery "depends a lot on how the financial institutions recover and how the financial sector recovers and also about housing," Mr. Plosser said.
Separately, chief financial officers at U.S. companies expect the recession to persist for another 14 months, according to a quarterly survey of 1,268 finance chiefs released Wednesday. Only 35% of respondents to the Duke University/CFO Magazine Global Business Outlook expect the economy to begin recovering in 2009.
The Fed this week announced it is launching its new credit program, the Term Asset-backed Securities Loan Facility, to promote lending to consumers and small businesses. "I'm not a big fan of the credit programs in general," Mr. Plosser said. "But I do think these are unusual times and that we may need to do things that we don't find terribly appealing because things are so unusual and difficult."
Meanwhile, the Institute for Supply Management, a group of purchasing managers, said service industries continued to contract in February. Its index of nonmanufacturing activity, such as hotels and financial services, fell to 41.6 in February from 42.9 a month earlier. A measure above 50 represents expansion; below 50 means contraction.
Economists expect the Labor Department to report on Friday that the economy lost about 630,000 jobs in February, which would be the worst month in the 15-month-old recession. A report Wednesday from payroll firm Automatic Data Processing Inc. and Macroeconomic Advisers, a forecasting firm, based on its surveys, put the decline in private-sector payrolls at 697,000 for February.