Fed Data, Other Reports Show Uneven Growth : * Economy: A survey of business conditions by the Fed is more pessimistic than before. Meanwhile, building permits are down and past-due consumer loans are rising.

The economic recovery remains uneven nationwide, with some areas reviving on the strength of manufacturing and others, including California, struggling with slow retail sales, a decline in real estate activity and credit problems, the Federal Reserve said Wednesday.

The survey of business conditions, known as the Beige Book, was more pessimistic than the last report issued in August and raised new doubts over whether the country is firmly on a path of renewed growth after the recession that began in July, 1990.

The economic problems grew in the 12th District, which includes California and eight other western states. “Economic conditions remain weak in much of the 12th District, with areas that have felt the impact of the recession reporting few signs of recovery,” the Fed said.

In other economic news Wednesday, the Commerce Department reported that construction of new homes and apartments edged up only a slight 0.6% in August, while the number of building permits, considered a good sign of future activity, fell for the first time since February, declining 4.6%.

To many economists, the housing report raised serious questions over whether the rebound in housing, which normally leads the country out of recession, is about to falter.

And in another report, the American Bankers Assn. said the percentage of consumer loans at least 30 days past due rose to 2.73% in the April-June quarter, the second-highest level in more than a decade.

Analysts said this report showed that debt-strapped consumers faced with weak income growth in a recession were having increasing trouble paying off their bills and probably were not able to begin spending again soon.

“The recovery is in trouble,” said David Jones, senior economist at Aubrey G. Lanston & Co., a government securities dealer in New York. “I think it is going to falter largely because of an uncertain and cautious consumer.”

The newest Fed survey sounded more downbeat than an assessment released in early August, when the central bank was more optimistic about the prospects for the housing industry and consumer spending. The economic problems appeared to have grown in California.

It found widespread weakness in consumer spending, which accounts for two-thirds of total economic activity, and said there were troubling signs that the rebound in housing activity was losing momentum.

“There is little sign of a sizable rebound in consumer spending that will contribute to a strengthening in business activity,” the Fed report stated. “Retail sales in recent months show only scattered improvement, and most retailers are cautious about sales prospects.”

The Fed said consumer spending remained weak in much of the West. One soft-goods retailer reported sluggish sales in California, Oregon and Alaska. “In California, higher sales tax rates are blamed for some of the slowdown in retail sales,” the report said.

On the housing front, the Fed said that fewer than half of its 12 regions reported further increases in housing starts and sales.

In California, home sales slowed after a rebound in spring, but homes prices have stabilized. “Commercial markets in Southern California continue to languish, with vacancy rates in downtown Los Angles expected to rise as new space comes on line,” the report said.

The Fed’s review of economic conditions, coupled with various weak economic reports in recent weeks, cast doubt on the Bush Administration’s assertions that the recession has ended and that a sustainable recovery is under way.

The central bank last week pushed a key bank lending rate down to its lowest level in 18 years. The new report will serve as the basis for discussion at the Fed’s next policy meeting Oct. 1.

Many economists believe that unless there is a significant improvement in economic activity, the central bank will be forced to move again to lower interest rates in an effort to get businesses and consumers to spend and borrow more.

The Fed survey found that the strongest sector in the economy at present is manufacturing, with the gains led by rising export sales.

It said strength at U.S. factories had been particularly noticeable in the Chicago and Cleveland regions, where the upturn had been led by rising automotive and appliance output, which had supported a gradual rise in steel output.

But the Fed said not all districts have shared in the manufacturing upturn, with two notable exceptions being New England and the West.

The picture in the farm sector was mixed, according to the report. Although record cotton harvests were expected in the St. Louis and Dallas regions and bumper rice crops were predicted in St. Louis, other regions were being hurt by adverse weather.

In California, fruit harvests were large but some growers were having trouble meeting size and quality standards. The state’s agricultural exports continue to grow, the report said.

The Economy: A Regional Look

(1) Boston: Economic activity has not improved noticeably. Most retailers report flat or worse sales. Little expectation for upturn in economic activity until early 1992.

(2) New York: Several areas reported a pick-up in home sales. Unemployment in New York and New Jersey rose in August. Small and mid-size banks reported reduced loan demand.

(3) Philadelphia: Manufacturers reported continuing improvement. Retail sales are flat. Commercial lending slips while consumer and real estate loan volume was steady.

(4) Cleveland: Recovery is at slower pace than previous recoveries. Consumer spending is sluggish. Real estate market has weakened. Lenders report continued softness in bank loans.

(5) Richmond: Manufacturing activity rose, but retail sales and exports declined. Loan demand remained weak. Conditions in agriculture improved as timely rains helped crops.

(6) Atlanta: Economic recovery continued at an unsteady pace. Manufacturers’ reports are mixed. Building is stalled. Retailers were disappointed with August sales.

(7) Chicago: The economy expanded modestly despite sluggish consumer spending growth. The manufacturing sector strengthened further. Residential real estate activity softened somewhat.

(8) St. Louis: The economy is showing signs of weak growth. Manufacturing is stagnant, but some improvement in autos and exports. Home building has picked up. Loan growth remains weak.

(9) Minneapolis: Job market has improved slightly. Retail sales show moderate growth; auto sales are slow. Manufacturing industries were mixed. Tourism was the major bright spot.

(10) Kansas City: Economic conditions improve modestly. New home sales increased, and auto sales have picked up. Agriculture and energy contribute less to growth than in recent months.

(11) Dallas: Improvement is centered in home building and manufacturing. Growth is weak in the service-producing sectors. Energy hurt by low natural gas prices. Consumer spending sluggish.

(12) San Francisco: Economic conditions remain weak. Slow retail sales have hurt sales tax revenues in many jurisdictions. Manufacturing activity remains mixed. Some farmers report disappointing fruit harvests.

Source: Federal Reserve