Fed Beige Book says economy growing at ‘modest to moderate’ pace

‘Strong Case’

Federal Reserve Bank of New York President William C. Dudley said this month that “a strong case can be made that the pace of growth will pick up notably in 2014.”

Speaking July 2 in Stamford, Connecticut, Dudley, who serves as vice chairman of the Federal Open Market Committee, said “the private sector of the economy should continue to heal, while the amount of fiscal drag will begin to subside.”

Automatic budget cuts and a January increase in the payroll tax contributed to the U.S. government’s widest monthly budget surplus in more than five years in June. Receipts exceeded outlays by $116.5 billion last month, the biggest surplus since April 2008.

Consumer spending fell short of estimates in June, with sales at retailers climbing 0.4% last month, short of the 0.8% gain that was the median estimate of 82 economists in a Bloomberg survey.

Of the 49 companies in the Standard & Poor’s 500 Index that have reported second quarter earnings, 71% have exceeded analyst estimates. The S&P 500 hit a record high 1,682.5 on July 15.

Alcoa Earnings

Alcoa Inc., the largest U.S. aluminum producer, reported second-quarter adjusted earnings that beat analysts’ estimates after a better-than-expected performance at its unit that supplies components to aerospace and power companies.

The New York-based company expects “continued pressure on prices and demand in North American industrial products and European industrial products,” while auto demand is expected to remain strong, chief financial officer William Oplinger said in a July 8 conference call. “The economy in general is recovering slowly, with different speeds in Europe as well as in the U.S.”

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