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(AP) - The recession will continue and credit
issues likely will weigh on the economy for some time, but a
resumption of growth should not be too far off, a regional Federal
Reserve executive said Thursday.

      Gary Stern, president of the Federal Reserve Bank of
Minneapolis, told a crowd of several hundred attending an economic
summit in Sioux Falls that he thinks business activity will pick
up, especially given the economy's fundamental resilience.

      "Interest rates are low and financial conditions are improving,
albeit unevenly," Stern said. "Major fiscal policy stimulus is
now under way and should add to aggregate demand in a timely way
unless consumers and businesses turn exceedingly cautious."


      Stern leads the Fed's ninth district, which includes the
Dakotas, Minnesota, Montana, the Upper Peninsula of Michigan and
parts of northwestern Wisconsin.


      He said the region initially avoided many of the recession's
effects but has since fallen in line with the national economy. 


The
beauty of diversified economies such as those found in the Dakotas
and Minnesota is that states are not dependent on any one industry,
he said.


      "On the other hand, if you've got a broad-based recession of
the type we have, virtually all industries are affected," Stern
said. "It's hard to get away from it."


      Brad Anderson, retiring chairman and chief executive of Best Buy
Inc., headquartered in Richfield, Minn., said consumers have pulled
back on spending and renewed their focus on saving. But the trend
should not be viewed as a threat to retailers, he said.


      The U.S. consumer remains the main driver of the world's growth,
he said. Best Buy's goal is to establish long relationships with
consumers and "the last thing we want is our customers to get
themselves in trouble," Anderson said.


      "I actually don't want consumers to reverse some of the more
conservative trends that they're exhibiting," he said.


      Sen. John Thune, R-S.D., said federal spending has gotten out of
hand and is creating much anxiety in the financial markets. The
U.S. government should take some cues from residents who are having
to make tough choices, he said.


      "We see families tightening their belts. We see small
businesses tightening their belts," Thune said. "The one area
where there hasn't been a lot of belt tightening has been
Washington, D.C."


      Stern said it's essential to restore the health of financial
institutions and markets so long-term projects can get financing.


      The initial stage of the recovery is likely to be "subdued,"
he said.


      "There is historical precedent for this, since the recovery of
the early 1990s was initially quite modest, as was the recovery
earlier this decade," Stern said.

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Gary Stern, president of the Federal Reserve Bank of Minneapolis, says he thinks business activity will pick up, especially given the economy's fundamental resilience.

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