Fed survey finds moderate US growth during summer
WASHINGTON (AP) — The U.S. economy grew moderately in July and early August, and hiring was more robust than in the previous six-week period, the Federal Reserve said Wednesday.
The Fed report on business conditions said nine of its 12 districts reported growth that was "modest" or "moderate." That's roughly in line with the conditions described in the previous report.
Strength in auto sales, tourism and home sales in July and early August offset weakness in manufacturing.
The report comes two days before Fed Chairman Ben Bernanke will address an annual conference of economists in Jackson Hole, Wyo. Investors will be listening for any signals about whether the Fed might take action at its next policy meeting Sept. 12-13 to stimulate the economy.
Michael Gapin, an economist at Barclays, said he viewed the latest Fed survey of business conditions as slightly more positive than the July report. But he said companies continue to worry about threats, including economic weakness in Europe.
Analysts said nothing in the report would discourage the Fed from helping the economy, if its policymakers saw the need for it.
"As long as activity grows at a rate that fails to bring down the unemployment rate, Fed action remains on the table," said Paul Edelstein, director of financial economics at HIS Global Insight.
The economy is still struggling to gain traction more than three years after the end of the Great Recession in June 2009. The Fed report said that six of its districts reported weaker demand in manufacturing. And it highlighted concerns about a severe drought affecting cotton, soybean and corn crops in its Chicago, St. Louis and Kansas City districts.
The report, known as the Beige Book, is released eight times a year. It's based on information that the Fed's 12 regional banks gather from business contacts around the country.
At its last policy meeting on July 31-Aug. 1, the Fed took no action. But the minutes from that meeting signaled that Fed officials might act as soon as September, possibly by launching a fresh round of bond buying. The goal of the bond purchases would be to lower long-term interest rates to encourage more borrowing and spending.
The minutes showed that Fed officials spoke with increased urgency about the need to provide more help for the U.S. economy. Many officials felt further support would be needed "fairly soon" unless the economy improved significantly.
The Fed has already sought to drive down long-term rates by buying more than $2 trillion in Treasury bonds and mortgage-backed securities in two previous rounds of bond purchases. These purchases are known as "quantitative easing."