The FOMC also said in in March that it will keep the benchmark interest rate near zero as long as unemployment remains above 6.5% and inflation is projected to be no more than 2.5%.
The 88,000 pace of payrolls growth in March was less than the most pessimistic forecast in a Bloomberg survey and followed a revised 268,000 February increase. A shrinking labor force helped reduce the unemployment rate to a four-year low of 7.6%.
The world’s largest economy slowed in the last three months of 2012 as military spending plunged the most since the waning days of the Vietnam War four decades ago. Gross domestic product in the first quarter probably grew at a 3% annualized pace, according to the median of 76 economist estimates in a Bloomberg survey taken April 5 to April 9.
“Participants thought that fiscal policy was exerting significant near-term restraint on the economy,” the minutes showed. They “judged that recent tax and spending changes were already restraining aggregate demand or would do so over the course of the year.”
On the other hand, rising home prices may be creating a “virtuous cycle” that supports household spending and financial markets, the minutes said. The S&P/Case-Shiller index of property values in 20 cities climbed 8.1% in January from a year earlier, the most since June 2006.
Automakers are getting a boost from an improved housing market and employment prospects as consumers replace vehicles that have been on the road for 11 years on average, according to Joe Hinrichs, president of the Americas at Dearborn, Michigan- based Ford Motor Co.
Retail buyers have been the “driving force for the steady improvement in the industry selling rates,” Hinrichs told industry analysts in a March 27 presentation. He said gains in housing starts are “highly correlated” with increased pick-up truck sales, which is a “very favorable trend” for Ford.