Many parts of the country managed to log decent economic activity in September and early October even amid the soaring energy prices and other repercussions from hurricanes Katrina and Rita.
The Federal Reserve’s survey released Wednesday provided the latest snapshot of business conditions nationwide in the aftermath of Katrina, the most costly natural disaster in U.S. history, and Rita.
“Economic activity continued to expand ... Most districts described the pace of activity as moderate or gradual,” according to the Fed survey.
The Fed’s survey is based on information collected before Oct. 11 and supplied from its 12 regional banks.
Katrina ripped through parts of Louisiana, Mississippi and Alabama in late August, destroying businesses, homes and lives. The blow was compounded by Rita, which struck on Sept. 24. Both hurricanes hobbled important oil and gas facilities along the Gulf Coast, pushing energy prices even higher.
Against that backdrop, all Fed regions reported rising costs for energy, building materials, shipping and other things, the survey said. Several regions suggested that some of these increased costs are being passed along to consumers in the form of higher retail prices.
“Chicago cited price increases for pharmaceuticals and air travel. In Richmond and Atlanta, retailers and other business firms reported passing their cost increases through into their selling prices, and in Philadelphia and Dallas, large numbers of business firms said they have raised, or plan to raise their prices,” the Fed survey said.
Others Fed regions suggested that businesses are being more restrained in raising prices to consumers. The San Francisco region reported that consumer prices have remained stable, while Boston and Chicago reported that the ability of local businesses to raise prices was limited.
The Fed’s survey will figure into the discussions and decision-making of Fed policy-makers at their next meeting on Nov. 1.
Many economists believe the Fed will boost short-term interest rates by another quarter percentage point to 4 percent at the November meeting to fend off an outbreak of inflation. Such a move would mark the 12th increase of that size since the Fed began to tighten credit in June 2004.