The US economy was expanding in most of the country in January and last month, helped by gains in consumer spending and home sales. However, there were also rising headwinds from falling oil prices and a strong US dollar that held back some sectors, the US Federal Reserve said on Wednesday.
The Fed’s latest survey of business conditions in its 12 regions found moderate gains in most regions. Two areas — New York City and Dallas, Texas — described activity as flat. Kansas City, a region hurt by weakness in energy and farming, reported a modest decline.
The Fed survey, known as the “Beige Book,” is to be discussed at the central bank’s next meeting on March 16 and 17. Most economists expect the Fed to leave a key interest rate unchanged.
The Fed survey found that while consumer inflation was holding steady, wage growth varied considerably from flat to strong. The central bank is hoping that rising employment can boost pay, which has lagged since this recovery began in mid-2009. And Fed officials believe that rising wages could help lift inflation closer to the Fed’s target of prices increases of about 2 percent per year. Inflation has been running below that level for the past three years.
Economists said the findings in the Fed survey supported their view that the economy is avoiding a recession despite the turbulence.
“Trade and energy remain the most significant drags on growth, but the positives for the economy are more than enough to offset these,” PNC Financial Services chief economist Stuart Hoffman said. “Consumer spending, the housing market and commercial construction continue to lead growth in early 2016.”
Most economists believe the economy, which slowed to growth of just 1 percent in the fourth quarter of last year, is set to rebound to growth of about 2 percent in the current quarter.
The Fed approved its first rate hike in nearly a decade at its meeting in December last year, choosing instead to wait and see how global market turbulence at the beginning of the year and weaker US exports affect the overall economy.
The Fed survey was based on information collected before Monday last week.
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