The Federal Reserve said the U.S. economic expansion remained “moderate” amid gains in manufacturing, housing and autos that offset weakness in defense-related industries in some regions.
“Most districts noted increases in manufacturing activity since the previous report,” the central bank said today in its Beige Book business survey, which is based on reports from the Fed’s 12 regional banks from late February to early April. “Particular strength was seen in industries tied to residential construction and automobiles.”
Most regions said “residential and commercial real estate improved markedly” as housing prices rose in many areas and demand for home loans was “steady to slightly up,” the Fed said. Consumer spending “grew modestly” even as some regions said sales were curbed by rising gasoline prices, higher payroll taxes and winter weather. “Employment conditions remained unchanged or improved somewhat,” the report said.
Several policy makers, including Federal Reserve Bank of New York President William C. Dudley, have said the Fed should maintain record monetary stimulus after an April 5 report showed employers added 88,000 workers in March, the smallest gain in nine months. The Federal Open Market Committee said in March that it will continue buying $85 billion in bonds each month until the labor market “improves substantially.”
The panel also repeated its pledge to keep the main interest rate near zero so long as the unemployment rate remains above 6.5 percent and the forecast for inflation doesn’t exceed 2.5 percent over one to two years.
The Standard & Poor’s 500 Index remained lower after the report, declining 1.7 percent to 1,548.45 as of 2:51 p.m. in New York amid losses in industrial metals and disappointing earnings from Bank of America Corp. and others. The yield on the benchmark 10-year Treasury decreased 0.03 percentage point to 1.69 percent.
Today’s Beige Book report showed that growth was “moderate” in five districts, “modest” in another five and accelerated “slightly” in the New York and Dallas districts.
“The tone is slightly more upbeat, which is encouraging as we have had some data suggesting the economy hit a soft patch,” said Russell Price, senior economist at Ameriprise Financial Inc. in Detroit. “The regional breakdown tells us the economy is holding up a little better than expected.”
In its last Beige Book report, released on March 6, the Fed said the economy grew at a modest to moderate pace across most of the country amid rising consumer demand for homes and autos.
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