Fed Survey Finds US Economy Still Expanding

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Source:   —  April 13, 2016, at 10:56 PM

The Fed'south latest survey of business conditions in its twelve districts found that consumer spending was rising modestly and salary were increasing in all districts except Atlanta.

The Federal Reserve said Wednesday that the economy kept expanding in late Feb and March, despite weakness in the energy sector and a slowdown in exports of some factory and farm products because of global weakness and the strong dollar.

The Fed'south latest survey of business conditions in its twelve districts found that consumer spending was rising modestly and salary were increasing in all districts except Atlanta. Fed executive are hoping to look a pickup in salary after a prolonged period of feeble wage growth following the Great Recession.

The survey, known as the Beige Book, will be considered at the Fed'south following meeting on April 26-27.

Economists expect the Fed to hold its benchmark policy rate unchanged in a range of 0.25 % to 0.5 percent. The Fed boosted the rate by a quarter-point in December after keeping it at a record low close zero for seven years.

It kept rates unchanged in Jan and March, preferring to look what the fallout of a spreading global slowdown and turbulent financial markets would be on the U. S. economy.

Fed Chair Janet Yellen has emphasized in recent comments that the Fed still expects lift rates gradually, particularly since inflation remains well below its target of price increases of two % per year.

The latest Fed survey, based on responses gathered before April seven, found that retail prices were climbing modestly, held back by falling energy prices. Low energy costs were helping to boost airline profit margins, the report said, and trimmed the cost of petroleum-based materials such as roofing shingles.

The survey found wage gains in all districts but Atlanta. New York, St. Louis, Minneapolis and San Francisco reported "moderate" wage growth, while the Chicago district characterized wage gains as "mild." Most districts reported work growth, with only the Cleveland district reporting a decline in overall employment.

The strongest wage gains were in occupations experiencing work shortages. Boston, Cleveland and St. Louis cited "sizeable" wage growth for workers in such fields as information technology, skilled construction jobs and some manufacturing trades.

By contrast, districts with heavy concentrations of energy industries reported layoffs due to cutbacks in exploration and production. The report said that oil and gas production continued to fall in the Atlanta, KS City and Dallas districts. Districts reporting layoffs in the energy sector included Cleveland, Atlanta, St. Louis, Minneapolis and Dallas.

Most districts reported gains in manufacturing, with the exception of Cleveland and Kansas City.

Housing construction expanded in most districts, with several districts crediting a mild winter for boosting residence sales. The San Francisco district reported backlogs of more than six months for new single-family homes.

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