Fri, Jul 19, 2013 - Page 15 News List

US economy growing at ‘moderate’ pace, Fed says

BRIGHT BEIGE:Despite most sectors picking up, Fed Chairman Ben Bernanke said high unemployment and low inflation meant policy would stay ‘accommodative’

AFP, WASHINGTON and HONG KONG

US Federal Reserve Chairman Ben Bernanke testifies before the US House of Representatives Financial Services Committee in Washington on Wednesday.

Photo: AFP

The US economy grew at a “modest to moderate” pace in recent weeks, with the housing market and construction improving nationwide, the US Federal Reserve said in a report on Wednesday.

The Beige Book’s overall assessment of the US economy was unchanged from the June 5 report.

“Overall economic activity continued to increase at a modest to moderate pace since the previous survey,” said the report, which covers from late May through July 8.

The rebounding housing market continued to be a bright spot in the US’ recovery.

“Residential real estate and construction activity increased at a moderate to strong pace in all reporting districts,” the report said.

Most of the Fed’s 12 districts reported a pickup in manufacturing, consumer spending and auto sales, while hiring “held steady or increased at a measured pace,” the report said.

The Beige Book is used by Fed policymakers to frame monetary policy decisions.

Based on anecdotal information gathered in the US central bank’s 12 districts, the report is published eight times a year approximately two weeks ahead of the bank’s Federal Open Market Committee meetings.

The committee is scheduled to meet on July 30 and July 31. At its meeting last month, the committee kept its stimulus program locked in place, saying unemployment remains high and growth was curbed by sharp federal spending cuts.

The Fed has made reducing high unemployment, which stood at 7.6 percent last month, an overarching goal of its stimulus program.

US Federal Reserve Chairman Ben Bernanke reiterated on Wednesday that the Fed stimulus could be wound down next year if economic growth remains steady as forecast.

However, with unemployment still high and falling slowly and inflation very low, “a highly accommodative monetary policy will remain appropriate for the foreseeable future,” he said.

In Asia, markets were mixed yesterday amid a muted reaction to Bernanke’s comments that the Fed had no plan to wind down its stimulus until the US economy was back on track.

The remarks calmed dealers nervous about the tapering off of the stimulus program and helped Wall Street end in positive territory.

Tokyo rose 1.32 percent, or 193.46 points, to 14,808.50 as confident forex dealers pushed the US dollar back above the ¥100 level, while Sydney added 0.24 percent, or 11.7 points, to close at 4,993.4.

However, the TAIEX fell 0.75 percent, or 61.97 points, to 8,196.98, the KOSPI fell 0.64 percent, or 12.01 points, to 1.875.48, Hong Kong dipped 0.12 percent and Shanghai declined 1.05 percent.

“Bernanke’s words were nothing new, but did have a calming effect for those still harbouring jitters about a near-term end of the US easing policy,” said Hiroichi Nishi, general manager of equities at SMBC Nikko Securities.

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