WASHINGTON, D.C.: The US economy cranked back into middle gear during April and May after stalling in the first quarter of the year, the Federal Reserve’s Beige Book regional survey said on Wednesday (Thursday in Manila).
Consumer spending played a big part in the rebound, it said, as did construction and tourism.
Respondents to the regional survey, which helps shape Fed policy decisions, “were generally optimistic” in their outlook, expecting growth to continue or pick up.
But the report also showed the recovery from the January-to-March downturn was spotty from region to region, suggesting some residual weakness after the winter slump.
The report characterized overall growth as “modest” to “moderate,” which is how the Fed generally described the economy throughout 2014.
Most of the Fed’s 12 districts reported gains in consumer spending, including on cars and homes; in construction; and in travel and tourism.
Some of that was attributed to the boost to household incomes from lower gasoline prices after the oil price crash.
The comments on consumers were reassuring, after a series of reports showing that Americans were largely saving any new money they were taking in, rather than spending it.
But cheap oil also took a toll on the hubs of the petroleum industry, where drillers and service companies have been laid off thousands.
That contributed to sluggish growth in two key oil regions: the Fed’s Dallas, Texas district, and the Kansas City district just to the north, which includes Oklahoma.
The Beige Book survey, which covered roughly six weeks to late May, showed the economy coming back after it contracted 0.7 percent in the first three months of the year, due to a combination of the effects of harsh winter weather in some areas and the grinding port slowdown on the west coast.
But the survey suggests the spring rebound was not as strong as hoped. The huge Atlanta Fed district, covering much of the southeast, reported the pace of growth generally unchanged after the winter, with retail sales growth soft.
Manufacturing activity was at best slightly faster across the country; jobs and wage gains were also only “slight” overall.
The banking and finance industry also showed mixed results: business and consumer higher in some regions, and lower in others.
The strongest growth was in the Richmond, Chicago, Minneapolis and San Francisco Fed districts.
The Fed survey echoed what other data reports released this week said about the economy’s modest comeback from the first quarter drop.
Data out Wednesday showed a fall in the trade balance as the impact of the West Coast ports slowdown ebbs, and the ISM service sector gauge for May, while lower than the previous month, was still in solid growth territory.
Markets moved more in reaction to other events. The dollar fell against the euro amid rising expectations that Greece will reach a deal with creditors to avoid a default that could rattle the eurozone. US stocks were higher generally after showing weakness for three straight sessions.