Fed terms US economy as 'weak, soft and subdued'

From Fazle RashidbrNEW YORK, Sept 04 The US Federal Reserve Bank's beige book that provides a picture of the national economy painted a gloomy picture describing the state of health of the American economy as ' weak, soft and subdued'. The survey said that the economy spent the summer in rut with consumers feeling little relief from the tax rebates given by the government, the New York Times (NYT) in a report said today. brAmerican economy failed to gather momentum because of rising prices and weak job market. This induced consumers to reduce spending, according to the report. brThe drop in gasoline and oil prices had little salutary effect. The business houses reported that they have squeezed by expensive raw materials and have been forced to raise prices. Consumers spending slowed, they went to discount stores and bought non-brand items. Consumers are concentrating on food, staples and other essential items and reducing spending on ' discretionary items'brThe Fed policy makers are likely to keep the interest rates on the hold. They expressed their determination to control inflation. The Fed will not raise interest rates because this will further dry up job opportunities now at their lowest. The banks are ' confronting a treacherous financial landscape'. There is little hope in the horizon that could encourage Americans to start spending as usual.brIn the meanwhile, the airline business is set to see a revolutionary act very soon. The two giant airline companies with offices on either end of the Atlantic are on the verge of a grand alliances. The airlines are British Airways and American Airlines. The American Airlines have applied for issuance of a anti-trust immunity.brThe American Airlines' rival Virgin Atlantic has claimed that the merger will create a monopoly on trans-Atlantic service from London's Heathrow Airport. If the alliance go ahead, which hinges on receiving the anti-trust immunity, the two together will serve 443 destinations, Dhaka included in 106 countries. A phenomenal 6300 (6300) flights a day will be operating.brThe British Airways, in addition to its alliance with American Airlines, in its bid to further expand the business, is negotiating with Iberia, Royal Jordanian Airlines, which is least heard among the growing middle-east airline business and Finnair. brRichard Branson, the head of the Viorgin Atlantic described the alliance ' Monster Monopoly' He said that the two airlines would have nearly 60 per cent of passengers travelling from London to United States, the NYT quoted him as saying. Virgin Atlantic crusading against the alliance has painted some of its aircraft with slogan ' No way , AABA.brAmerican Airlines countered Virgin Atlantic's claim of taking 79 per cent of the traffic. AA said the alliance's share of passengers from Heathrow to JFK in New York would not exceed 43 per cent. The AA and BA are in panic mood as they cannot simply defend the indefensible, Virgin Atlantic officials said. AA is confident of receiving the anti-trust immunity certificate before President Bush leaves office on January 20, 2009.