WASHINGTON, D.C.: The US economy was still growing at a mostly modest pace in recent weeks, though there were signs of a slowdown in consumer spending, the Federal Reserve reported on Wednesday (Thursday in Manila).
“Economic activity continued to expand at a modest pace across most regions,” the Fed said in its latest Beige Book report covering mid-May through the end of June.
The report, based on a collection of information from business and other contacts outside the central bank, painted a broadly healthy, stable picture of the US economy as the Fed prepares for its monetary policy meeting in July.
Consumer spending, the main driver of the economy accounting for about two thirds of activity, was “positive” in general “but with some signs of softening,” the report said.
Most of the Fed’s 12 districts reported a slowdown in auto sales that still remained at “fairly high levels.” Retailers reported mixed sales, with declines in eastern areas, including Philadelphia, and growth in the Midwest and San Francisco.
There was little change in the jobs market. “Labor market conditions remained stable as employment continued to grow modestly since the previous report and wage pressures remained modest to moderate,” the report said.
Inflation kept to its prolonged muted path: “Price pressures remained slight.”
The report noted some bright spots in the world’s largest economy. Manufacturing, which has been on the defensive from a strong dollar, “generally improved” across most districts.
The housing market, a source of strength since the US emerged from severe recession seven years ago, continued to strengthen.
“The outlook was generally positive across broad segments of the economy including retail sales, manufacturing, and real estate. Districts reporting on overall growth expect it to remain modest,” the Fed said.
The potential fallout from Britain’s decision to exit the EU was seen as modest.
“While a number of contacts cited the UK’s ‘Brexit’ vote to exit the European Union as a downside risk to aggregate economic growth, those with direct exposure do not expect severe negative impacts on their own firms’ outcomes,” the report said, referring to the Boston district in the Northeast.
The Beige Book report feeds into the Fed’s policy making decisions. The Federal Open Market Committee (FOMC) next meets on July 26 and 27.
The FOMC is widely expected to hold its federal funds rate at an ultra-low 0.25 percent to 0.50 percent amid the unclear outlook for US growth this year.