Beige book: Fed banks see widespread signs of economic slowdown
Members of the audience look on as President Obama makes remarks on the economy in Cleveland, Ohio.
(Photo Credit: Tim Sloan/AFP/Getty Images)
By Neil Irwin
The U.S. economy continued growing this summer, but "with widespread signs of deceleration," according to a new report on business conditions around the country.
The Federal Reserve's "beige book," an eight-times-a-year compilation of anecdotal information from firms in the 12 Fed districts, was released Wednesday afternoon and offers a portrait of an uncertain economic moment in which growth has slowed in much of the United States.
"Economic growth at a modest pace was the most common characterization of overall conditions," the report, which was based on interviews with businesspeople from mid-July through the end of August. However, five of the Fed regional banks east of the Mississippi River "highlighted mixed conditions or deceleration in overall economic activity."
The anecdotal information contained in the beige book is consistent with a slew of recent economic reports showing that the burst of growth in late 2009 and early 2010 has not persisted through the summer, as the impact of the fiscal stimulus and of businesses rebuilding their inventories fades.
Overall economic activity, as measured by gross domestic product, rose at only a 1.6 percent annual rate in the April-through-June quarter, too slow to push down the unemployment rate, and forecasts for the third quarter, which ends this month, are not much better.
According to the beige book, consumer spending seems to be rising slowly. Most Fed districts reported that retail sales excluding automobiles rose. But the Atlanta Fed "reported a decline in the level of sales, and Richmond noted that sales 'sputtered' in August, while New York and Dallas reported that growth in retail sales slowed."
Spending on big-ticket items such as consumer electronics was weak, according to Fed banks in Philadelphia, Richmond and Dallas, and most districts reported that auto sales were "largely stable or up."
Manufacturing activity, meanwhile, "expanded further on balance, although the pace of growth appeared to be slower than earlier in the year."
Federal Reserve officials use the report to help decide the course of monetary policy, releasing it in advance of their policymaking meeting. The Federal Open Market Committee is scheduled to meet Sept. 21, and officials are expected to leave their interest rate target near zero but probably won't undertake any new unconventional efforts to prop up growth.
September 8, 2010; 2:34 PM ET
Categories: Federal Reserve , U.S. Economy
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