Despite lackluster growth seen in the final quarter of last year, the Federal Reserve's economic update provides evidence of continuing expansion.
The Beige Book survey, prepared for the central bank's policy-setting meeting later this month, finds that economic activity "generally expanded at a modest to moderate pace" through January and most of February. The information was collected through Feb. 22.
The report stands in stark contrast to fears that the prolonged budget stalemate in Washington is causing Main Street to significantly ratchet back.
The Boston and Chicago regions were said to have expanded slowly.
Next Fed meeting
The Federal Reserve meets for two days beginning March 19. It has pledged to continue to keep the short-term federal funds rate at a record-low level for as long as unemployment remains high and inflation remains low. Many experts believe the policy translates to no rate hikes for the next two years, at least.
Officials including Chairman Ben Bernanke have said the central bank will likely continue to buy bonds to encourage consumer activity. The $85 billion in monthly purchases, dubbed quantitative easing, has apparently had some of the intended effect. The report says "most districts reported expansion in consumer spending." Automobile sales were "strong or solid" in most regions.
The Beige Book notes that the housing market was improving throughout much of the country, while home prices were rising and housing inventories were falling. Commercial real estate activity "was mixed or improved slightly in most districts." Additionally, referencing stable or slightly higher loan demand in most regions, the report said "several bankers noted stiff competition for qualified borrowers."
The writers of the Beige Book made one reference to Washington's problems: "Contacts in the Cleveland, Richmond, Chicago and Kansas City Districts cited concerns over government regulation and fiscal uncertainty as a reason for slow growth."
Job market improving
Ahead of the February employment report, due Friday from the Labor Department, the Fed says "labor market conditions generally improved," although restrained hiring was reported in several districts." In some regions, a shortage of skilled workers was noted in areas such as engineering, truck driving, software development and technical positions. Many districts told of an increase in temporary workers.
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