Fed: U.S. economy continues expansion
Washington (Sept 4) The U.S. economy strengthened in all regions of the country in July and August, in areas from consumer spending to auto sales to tourism, the Federal Reserve reported in a survey released Wednesday.
All 12 of the Fed’s regions reported growth. Six — New York, Cleveland, Chicago, Minneapolis, Dallas and San Francisco — characterized growth as “moderate.” The other regions reported somewhat slower expansion. Four described growth as “modest,” and two noted signs of improvement.
The survey found no clear evidence that the economy is expanding so fast that the Fed might soon need to begin raising interest rates to prevent inflation.
Most regions reported optimism about key economic sectors. A majority cited increased loan demand, for example, and hotel occupancies.
The survey, known as the Beige Book, is based on anecdotal reports from businesses and will be considered with other data when Fed policymakers next meet Sept. 16-17.
After that meeting, economists think the Fed will reduce its monthly bond purchases for a seventh time but will leave its key short-term rate unchanged. That rate has been near zero since December 2008. The Fed has kept rates ultra-low to try to reduce high unemployment and energize a sluggish recovery.
Now, with job growth strong and unemployment falling, investors have been speculating about when the Fed will start raising rates. Most analysts think the first increase will occur around mid-2015.
At its September meeting, the Fed is expected to reiterate that rates will remain low “for a considerable time” after the bond purchases end. Those purchases are set to end in October.
The Fed survey said trends in employment, wages and inflation had remained “relatively unchanged” in the past two months.