Fed says ‘moderate’ growth in U.S. was led by housing, autos

Home Construction

New-home construction in the U.S. climbed in March to the highest level in almost five years, propelled by a surge in multifamily building, a report from the Commerce Department showed yesterday. Other reports showed consumer prices unexpectedly dropped last month and factory production cooled.

Dudley said yesterday federal tax increases that took effect in January, along with the across-the-board spending cuts known as sequestration, are curbing gains from the housing rebound and stronger business and consumer spending.

“In the near term, there is considerable uncertainty about the outlook, particularly because the multiplier effects from fiscal drag,” he said in a speech in Staten Island.

CSX Corp., the biggest eastern U.S. railroad, said 2013 earnings growth may be “flat to down from prior-year levels,” according to the Jacksonville, Florida-based company’s first- quarter statement yesterday.

Chief Executive Officer Michael Ward said in a telephone interview today that growth will remain sluggish should Congress and President Barack Obama fail to agree on a budget.

‘Muddle Along’

“If we survive the near-term crises, we will continue to see slow growth,” Ward said. “My sense is we will continue to muddle along” at a range of 1 percent to 2 percent.

Retail sales dropped in March by the most in nine months, decreasing 0.4 percent. Confidence in the economy among Americans fell in April to a nine-month low, according to the Reuters/University of Michigan preliminary index of consumer sentiment.

Even with those setbacks, gross domestic product probably climbed at a 3 percent annualized rate from January through March, according to the median forecast in a Bloomberg survey of 69 economists from April 5 to April 9. That’s up from the 2 percent gain projected by economists last month.

Bloomberg News

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