US economy grows at slower pace: Fed

Federal Reserve Chairman Ben Bernanke speaks
during a conference on economic growth
© AFP/Getty Images/File Alex Wong

WASHINGTON (AFP) – The US Federal Reserve said Wednesday that growth in the world’s biggest economy has slowed in the past seven weeks.

“Economic activity continued to grow; however the pace has moderated” in many areas of the country, the Fed said in its latest Beige Book, a report on regional economic conditions used in setting central bank monetary policy.

The report, based on assessments by the Fed’s 12 district banks, said there was a “slowdown” in activity in six districts nearest the Atlantic seaboard since the last Beige Book was published on June 8.

Elsewhere, growth ranged from unchanged to modest improvement, except for the Minneapolis, Minnesota region, which reported political and weather-related disruptions that “temporarily slowed growth.”

“Consumer spending increased overall, with modest growth of non-auto retail sales in a majority of districts,” it said.

The Fed suggested that falling gasoline prices throughout most of the reporting period “may have encouraged” additional spending.

Auto sales slowed “a little” amid lean inventories due to supply-chain disruptions from the Japanese earthquake in March.

Manufacturing activity “expanded overall,” but capital spending plans were “somewhat more cautious.”

The nonfinancial service sectors had “overall improved activity” in most districts, the report said.

Two trouble spots endured: the job market and the housing sector.

“Labor market conditions remained soft,” though most districts saw “modest” hiring increases.

Five years after a housing price bubble collapsed, most residential real-estate activity was “little changed and remained weak.”

The US government is scheduled to publish its first estimate of gross domestic product growth for the second quarter on Friday. Analysts are forecasting it will show output slowed from the first quarter’s pace of 1.9 percent. Their average GDP estimate is 1.7 percent for the April-June period.

The latest Beige Book report will serve as a reference for the policy-setting Federal Open Market Committee’s next meeting on August 9.

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