Fed’s ‘beige book’ report says economy expanded at modest pace
Regional economies throughout the nation are getting a boost in real estate and other sectors, but barely enough to keep overall growth continuing to expand “at a modest to moderate pace” in the last two months.
Housing markets in 12 federal regions were largely positive as sales increased and inventories declined, according to a survey released Wednesday by the Federal Reserve. The survey covers the nation’s 12 regional Federal Reserve Banks.
Indeed, U.S. builders last month began construction on the highest number of new homes since October 2008, with housing starts jumping 6.9% last month from May, according to a Commerce Department report Wednesday. It was the biggest month-over-month percentage gain in seven months.
The Fed’s report, based on surveys by the 12 regional Federal Reserve Banks, also found that retail sales increased slightly in most areas. It does not provide specific figures on the sectors or the regions.
But neither home sales nor retail sales were enough to offset declines in other sectors and provide any spark to the sluggish recovery from the Great Recession.
The report, known as the beige book, largely mirrors some of the comments about the economy that Fed Chairman Ben S. Bernanke made to Senate and House committees this week.
“The U.S. economy has continued to recover, but economic activity appears to have decelerated somewhat during the first half of this year,” Bernanke told a House panel Wednesday. He testified at a Senate committee hearing Tuesday.
The Fed, Bernanke assured both committees, was “prepared to take further action as appropriate to promote a stronger economic recovery.”
The brightest spot in the regional report was the travel and tourism sector, where several of the 12 regions reported “strong” activity.
Hotel occupancy rates were robust in the regions that are part of the San Francisco, New York, Richmond, Atlanta and Chicago Fed banks. And the outlook for the rest of the summer looked positive with hotel and convention bookings continuing to outpace last year’s rate.
Also strong in most districts were auto sales. “Demand was high for fuel-efficient vehicles, in particular,” the report noted.
The survey, however, signaled that the economy’s recovery had softened.
The pace of production in the manufacturing sector slowed the most since earlier this year. The districts of Cleveland, Atlanta, Chicago and Kansas City saw only “slight increases” in production levels.
Since the last report two months ago, almost all the districts reported that the pace of employment growth had been “tepid,” following state and national reports of recent weak job growth that is fanning fears of a stall in the recovery.
“The shadow of the European recession and uncertainty with fiscal policy in the U.S. ahead of the November election are becoming more apparent in an increasing number of Federal Reserve districts and industries,” wrote Eduardo J. Martinez, a Moody’s Analytics economist, in reaction to the report.
