Fed's Beige Book: Economic Growth Continues Despite Housing, Auto Weakness
{{#rendered}} {{/rendered}}Most parts of the country managed to enjoy moderate economic growth in the late fall despite troubles in the housing market and the automotive industry.
The New York and Richmond, Va., Federal Reserve districts reported that growth picked up, while the Atlanta region described activity as "mixed," the Fed said in a report released Wednesday. The Dallas district said that growth had ebbed from earlier, higher levels.
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{{#rendered}} {{/rendered}}The survey is based on information supplied by 12 regional Federal Reserve banks and collected before Nov. 20. This snapshot of economic health will figure into discussions at the central bank's next meeting, scheduled for Dec. 12.
Many economists predict that the Fed will again hold interest rates steady, sticking to a strategy first used in August, when policymakers voted to take a break from their two-year-long rate-raising campaign.
The central bank's survey comes one day after Fed chairman Ben Bernanke struck a largely positive tone that the economy should be able to weather the strains of the housing slump and weakness in the auto sector.
{{#rendered}} {{/rendered}}Outside housing and autos, economic activity remains solid, he said. "Overall, the economy is likely to expand at a moderate pace going forward," Bernanke said.
The Fed survey found that consumer spending — an ingredient indispensable to the economy's good health — advanced. Manufacturing activity was generally positive overall. And, the jobs market remained healthy, with workers' wages growing moderately.
On the shopping front, "despite continuing softness in automobile and housing-related sales, most districts reported that consumer spending increased during October and early November, and the retail sales outlook for the holiday season was cautiously optimistic," the Fed survey said.
{{#rendered}} {{/rendered}}At factories around the country, most districts saw good activity, the Fed report said.
The New York region reported brisk growth. The districts of Boston, Dallas, Kansas City and San Francisco said production trends in high-tech industries were positive. The Cleveland region reported that production of costly manufactured goods was up slightly from a year ago, although demand for steel products continued to soften. In the Chicago region, makers of machine tools and equipment reported robust demand — outside the auto industry. The Dallas district said energy-related manufacturing remained strong.
On the jobs front, there was strong demand — and in some markets shortages — for high-skilled workers. The Kansas City district, for instance, said there weren't enough engineers, oil field workers, accountants, welders, and truck drivers to meet hiring needs.
{{#rendered}} {{/rendered}}The nation's unemployment rate sank to a five-year low of 4.4 percent in October, suggesting the job market was in good shape even as economic growth has slowed this year.
The Fed said that overall wage growth "remained generally moderate." But some markets — Boston, New York and San Francisco — reported faster wage growth for certain specialized professions.
Bernanke, in his economic assessment Tuesday, said the Fed will be paying especially close attention to labor costs, which can spread inflation through the economy if they rise rapidly and aren't blunted by other economic forces.
{{#rendered}} {{/rendered}}In terms of other costs, companies in the Fed survey said they felt some relief from once-surging prices for energy and construction materials.