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MailTribune.com
  • Federal Reserve sees 'moderate' growth spurred by housing boost, vehicle sales

  • WASHINGTON — The U.S. economy is growing at a "moderate" pace, as housing's rebound and the continued recovery in the auto sector offset weaknesses stemming from federal government budget cuts, the expiration of the payroll tax cut and winter weather, the Federal Reserve said Wednesday.
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  • WASHINGTON — The U.S. economy is growing at a "moderate" pace, as housing's rebound and the continued recovery in the auto sector offset weaknesses stemming from federal government budget cuts, the expiration of the payroll tax cut and winter weather, the Federal Reserve said Wednesday.
    The Beige Book report released by the Fed, covering the period from late February to early April, is just slightly stronger in tone than the last Beige Book, which said the economy was growing "at a modest to moderate" pace.
    Of the Fed's 12 districts, five reported "moderate" growth, five reported "modest" growth, and New York and Dallas reported slight accelerations.
    The Beige Book breakdown doesn't come as much of a surprise and is backed up by recently released data.
    "Overall there is not enough here to suggest any change in QE at the April 30-May 1 meeting," said Maninder Sibia, an economist at Contingent Macro Advisors, in a note to clients. QE refers to the current round of quantitative easing, the $85 billion-per-month bond-buying plan at the Federal Reserve.
    "Particular strength" was seen in residential construction and automobiles, but several districts saw uncertainty or weakness in defense-related sectors.
    Automotive output in the first quarter grew at a 13.2 percent annual pace and construction supply output jumped 15 percent, the Federal Reserve had said on Tuesday in its industrial production report.
    Low interest rates have spurred both home and car sales, while the budget sequester has rattled the defense industry with the automatic budget cuts.
    Consumer spending grew modestly, with higher gasoline prices, the expiration of the payroll tax cut and winter weather restraining growth. Retail sales in March fell by the most in nine months, the Commerce Department said last week.
    Oil and natural gas activity remained "robust" and loan demand was steady to slightly up.
    Employment conditions remained unchanged or improved somewhat, and wage pressures were generally contained, save for particular occupations with shortages such as information technology, construction and engineering.
    The growth outlook remained on the optimistic side, with growth mostly expected at the same or slightly improved pace.
    Uncertainty was centered on fiscal policy and health care reform.
    The Federal Reserve Bank of Dallas wrote this Beige Book. That duty is rotated between the 12 Fed districts.
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