Businesses around the country are increasingly worried about the looming fiscal cliff, the Federal Reserve said Wednesday in its Beige Book survey of regional economies.
While consumer spending has picked up pace in recent weeks, manufacturing has fallen off, the Fed said, with business owners expressing worries about the sharp tax hikes and spending cuts that could hit them if Washington cannot agree on new legislation to avert the cliff.
The Fed said that nine of its 12 districts reported modest or better economic growth in the weeks since its October 10 report.
The New York region was weaker due to disruptions from the superstorm Sandy that shut the city and surrounding areas down at the end of October, Growth was also weaker in the Boston and Philadelphia regions, both affected to a lesser extent by Sandy.
Across most of the regions, businesses surveyed expressed increasing worries about the looming deficit-slashing policies of the cliff, which will hit from January 1 if Democrats and Republicans in Washington cannot negotiate a less harsh plan for reducing the deficit.
"Manufacturing contacts from five of the twelve districts expressed concern about the outlook for 2013, in part, due to the uncertainty regarding the outcome of the fiscal cliff," the report said.
"Many of our contacts are expecting a slight weakening in business activity during the next few months due to seasonal factors and uncertainty surrounding the outcome of the fiscal cliff," the Fed's Cleveland regional branch reported.