Most parts of the country saw modest economic growth in the past month, although there were pockets of sluggishness as businesses continued to cope with fallout from the troubled housing and automotive industries.
Information in the new snapshot, released Wednesday by the Federal Reserve, was collected before last week’s gut-wrenching nosedive in worldwide financial markets, in part reflecting investors’ worries about the health of the U.S. and Chinese economies.
Nonetheless, the survey is consistent with Fed chairman Ben Bernanke’s view — repeated anew after the market meltdown — that the central bank continues to foresee “moderate growth going forward.”
Information from the survey will figure into discussions at the central bank’s next meeting on March 20-21. Many economists expect the Fed will continue to hold interest rates steady, which it has done since August. Before that, the Fed had steadily boosted rates for two years to fend off inflation.
The Fed’s goal is to slow the economy sufficiently to curb inflation but not so much as to cripple economic growth.
The survey suggested that the price climate during the last month has been fairly steady, with most of the Fed’s 12 regional districts characterizing “price pressures as little changed.” And, even with the job market staying healthy in most parts of the country, workers’ pay increases “generally remained moderate.” Both observations in the Fed survey offered hopeful signs that inflation isn’t flaring up.
The survey is based on information supplied by the Fed’s 12 regional banks and collected on or before Feb. 26.
On the economic growth front, the survey said that “most Federal Reserve districts reported modest expansion in economic activity” over the past month but “several districts noted some slowing.”
For instance, the New York region said that although growth is “well maintained” there were a “few signs of deceleration.” The St. Louis district said activity “increased more slowly.” The Boston district reported some “softening” in economic activity and the Dallas region said business activity “continued to decelerate,” the Fed said.
The Fed survey found that overall manufacturing activity held steady or expanded even as some factories cut back on production due to problems in the auto and home-building sectors.
“Most districts reported that manufacturing activity related to residential real estate remained sluggish, especially for production of household appliances, furniture and building materials,” the Fed report said. The Atlanta, St. Louis and Dallas districts reported a “slowdown in manufacturing of auto-related products.”
The majority of Fed regions reported steady growth in retail sales but auto sales remained lackluster.
The housing slump continued to be felt in almost all parts of the country but there were signs of improvement noted in several Fed districts, the report said. For instance, in the New York region, builders in New Jersey said there was “some stabilization in the market for new homes,” and the Atlanta region reported that the declines in home sales were moderating, except for Florida. San Francisco also noted that the rate of deterioration had slowed in California but activity in hard-hit areas such as Arizona continued to shrink.