While economic conditions remain very depressed throughout the nation, there is a widespread view that a bottom was reached in the first quarter, possibly in January when severe weather hampered activity over a large portion of the nation. Allowing for weather effects, retail sales, manufacturing, employment, and construction have been about level since late last year. Despite deep pessimism, panic has been avoided. Sluggishness is expected to continue in the second quarter with some improvement about midyear, hopefully aided by lower interest rates.
Price inflation continues to slow.
With a downturn developing in oil and gas development, defense procurement becomes the principal expanding sector. Finished goods inventories are too high in some sectors, but most purchased materials are under close control. Capital spending plans generally are being reduced. Auto and appliance sales remain weak. Extreme caution holds back decisions on consumption and investment, especially on major items.