The economy ambled into the fall steadily but unstartlingly, with fresh signs of a slowdown as consumers watched spending more warily.
The Federal Reserve’s latest survey of America’s business climate, released Wednesday, found that “economic activity continued to expand ... but five districts indicated deceleration, while the remaining seven reported little change in the pace of growth.”
People held back, especially, on spending for automobiles and household items.
The survey is based on information supplied by 12 regional Federal Reserve banks and collected before Aug. 28. That snapshot will figure into discussions at the central bank’s next meeting on Sept. 20.
Many economists believe the Fed will hold rates steady at the September meeting. Others, however, think a rate increase could be in store then or perhaps later this year to thwart inflation.
With the economy slowing, the Fed in early August halted its rate-raising campaign that began more than two years ago. Policymakers are hoping that moderating economic growth will eventually lessen inflationary pressures.
The Fed’s survey said that even though businesses are faced with high prices for energy and other raw materials, these higher costs are not necessarily finding their way to shoppers in the form of higher retail prices.
“Widespread increases in the prices of energy and certain other commodities persisted since the last report, though most of these increases do not appear to have passed through to finished consumer goods,” the Fed survey found.
The survey said that most of the Fed’s districts reported that retail prices “remained steady.”
Oil prices, which surged to a closing record high of $77.03 a barrel in mid-July, have more recently retreated. They are currently hovering above $68 a barrel.
Still, the toll of high energy prices are believed to have “crimped consumer demand in general” in some Fed districts, the Fed survey said.
Overall, consumer spending increased “modestly in most districts ... though a few districts reported flat to declining sales,” the survey said.
The Fed survey described the market for labor as either “steady” or “expanding moderately” in many Fed districts with scattered reports of worker shortages. For instance, the Cleveland district indicated a shortage of truck drivers. Atlanta noted ongoing shortages of construction and hospitality workers along the Gulf Coast — where Hurricane Katrina struck last year. Chicago reported shortages of skilled factory workers and engineers.
Some companies reported pressure to boost workers’ wages, although these reports were mostly related to workers with special skills.
Last week, the government reported that the nation’s unemployment rate dropped to 4.7 percent as companies boosted payrolls.
In other areas, the Fed survey observed fresh signs of cooling in the once sizzling housing market.
“Reports on real estate and construction were uniformly weak for the residential sector,” the survey said. Most districts indicated “substantial increases” in the inventory of unsold homes, the survey said.
Relatively flat or declining home prices were noted in the New York, Richmond, Va., and Kansas City Fed districts, the survey said.
Banks reported a softening in demand for home mortgages but noted that credit quality was still favorable.
On the manufacturing front, activity continued to expand despite pockets of weakness mostly related to the automobile sector and home building, the survey said.