The US economy continues to grow slowly, with patches of weaker activity, the Federal Reserve said Wednesday in a report ahead of a key monetary policy meeting this month.Recent stock market swings and rising economic uncertainty have dampened confidence, the Fed said in its latest Beige Book report.The report, a collection of anecdotal economic data from the bank's 12 regional districts, was based on comments taken between mid-July through August 26.
It will be used by the Federal Open Market Committee at its next policy-setting meeting on September 20 and 21."Economic activity continued to expand at a modest pace, though some districts noted mixed or weakening activity," the report said.Five districts reported modest or slight expansion, while growth remained sluggish or slowed in the others.
Several districts reported that "recent stock market volatility and increased economic uncertainty has led many contacts to downgrade or become more cautious about their near-term outlooks," the report said.Consumer spending, the traditional engine of economic growth in the United States, "increased slightly in most districts," but non-auto retail sales were "flat or down" in several districts.Manufacturing conditions were "mixed" across the country, but the pace of activity slowed in many districts, according to the report.
High unemployment -- at 9.1 percent for the past two months -- showed little improvement. In August the economy added zero jobs as employers were reluctant to hire in the face of feeble demand and falling confidence in the health of the economy.
Labor markets were "generally stable," although some districts reported a modest rise in job growth, the report said.Amid the economic slack, price pressures edged lower, while input costs continued to increase in some industries.
"Most districts reported that wage pressures were minimal, but contacts noted some wage gains for several skilled positions as a result of heightened demand," it said.
The collapsed housing sector, once a pillar of the economy, remained "weak overall."
The report also showed that the economy took a hit from disruptions caused by severe summer weather during the period, including the massive Hurricane Irene that swept the eastern seaboard in late August.The report covered about half of the third quarter, a period marked by Washington political gridlock over huge debt and deficits, an 11th hour deal in Congress to avoid a default on sovereign debt, and the loss of the United States's coveted triple-A credit rating in a downgrade by Standard & Poor's.
The world's largest economy nearly stalled in the first quarter, growing only at an annual rate of 0.4 percent, and posted a tepid 1.0 percent expansion in the second quarter.
A recent series of mostly weak economic indicators, including the dismal August job market report, have raised expectations that the Fed will have to take stimulus action under its dual mandate of economic growth and maximum unemployment."The Federal Reserve's July Beige Book for September paints a slightly more optimistic view of recent performance of the US economy in contrast to several recent pessimistic economic reports including last week’s disappointing jobs report," said Eduardo Martinez at Moody's Analytics.