April 11 (Bloomberg) -- The Federal Reserve said the economy maintained its expansion in all 12 of its regions as manufacturing, hiring and retail sales showed signs of strength in the face of higher fuel prices.
“The economy continued to expand at a modest to moderate pace from mid-February through late March,” the Fed said today in its Beige Book business survey, published two weeks before the Federal Open Market Committee meets to set monetary policy. “Hiring was steady or showed a modest increase across many districts.”
The Beige Book offers anecdotal evidence helping policy makers assess an economy that added 120,000 jobs in March, the fewest since October. Fed Chairman Ben S. Bernanke last month said that further “significant” improvements in the unemployment rate would probably require a more-rapid expansion.
A “recent decline” in unemployment may reflect “a reversal of the unusually large layoffs that occurred during late 2008 and over 2009,” Bernanke said on March 26.
The Beige Book’s depiction of hiring may “discredit” the weaker jobs report from March, said Michael Materasso, co- chairman of the fixed-income policy committee at Franklin Templeton Investments Corp., in an interview on Bloomberg Television’s “Bottom Line.”
“The outlook for jobs seemed to be much more of what we were seeing in the prior months,” Materasso said.
Gasoline Price Increases
Higher gasoline prices may weigh on the economy, today’s report said. “While the near-term outlook for household spending was encouraging, contacts in several districts expressed concerns that rising gas prices could limit discretionary spending in the months to come,” the Fed said in the Beige Book.
Inflation was “modest,” the report said, and “upward pressure on wages was constrained.”
The U.S. economy, which grew at a 3 percent annual rate in the final three months of last year, will probably expand 2.2 percent in 2012 and 2.4 percent in 2013, according to a Bloomberg News survey of 72 economists.
Atlanta Fed President Dennis Lockhart said today that while the March jobs report was disappointing, he is still “not convinced that another round” of asset purchases by the central bank “would achieve a great deal.” Such policy should be held in reserve for a “fairly negative change of direction of the economy,” he said.
Before April 2
Today’s Beige Book reflects information collected on or before April 2 and summarized by the Cleveland Fed.
In the previous Beige Book released on Feb. 29, the Fed said “overall economic activity continued to increase at a modest to moderate pace in January and early February.” It said the districts of Cleveland, Chicago, Kansas City, Dallas and San Francisco reported moderate growth in February.
In this month’s survey, a “moderate pace” of growth was ascribed to Boston, Atlanta, Chicago, Dallas and San Francisco. Cleveland and St. Louis cited “modest growth.” New York said growth “picked up somewhat,” while Philadelphia and Richmond noted “improving business conditions.”
The economy grew at a “solid pace” in the Minneapolis Fed district and Kansas City cited “a faster pace.”
Manufacturers mentioned gains in automotive and high- technology industries, the report said. The firms “expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices.”