Economic conditions in the US weaken

According to the Beige Book, an influential source of information released by the US Federal Reserve, over the last six weeks the US economy has deteriorated.

The report, which is also used to determine interest rates for the nation and will be used at the next meeting, said an improvement was not expected before the end of 2009 or early 2010.

The US manufacturing sector is not performing well according to the report and neither is the housing market, which was described as being “in the doldrums”.

Meanwhile, the report noted that all districts reported a rise in unemployment, with redundancies and hiring freezes on the up.

Last week, official figures said the US economy had contracted at an annual rate of 6.2% in the October to December period last year - a much sharper fall than previously reported.

Earlier this week Ben Bernanke, Federal Reserve chairman, was calling for aggressive action to stimulate the US economy.

Speaking in front of the Senate Budget Committee in Washington, Mr Bernanke said that stabilising financial markets is vital for economic recovery.

Mr Bernanke said progress has been made on the financial side since last autumn but more bold action needs to be taken.

Meanwhile, the Treasury and the Fed have introduced a scheme to boost new lending. The scheme, called the Term Asset-Backed Securities Loan Facility (TALF), will see the Fed lend up to $200 billion to boost consumer lending for cars, credit cards and education.

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