The US economy is showing clear signs of emerging from the brutal winter, with consumer spending picking up broadly, the US Federal Reserve’s Beige Book survey said on Wednesday.
“Economic activity increased in most regions” of the country since the report from early last month, the Beige Book said, with “modest or moderate” expansion in most of the Fed regions surveyed.
The review of economic conditions covered mid-February through early this month, capturing still-severe winter weather effects that began to fade last month.
The survey backs the Fed’s view that much of the hibernation earlier in the year was due to severe winter weather and that a thaw would come as weather warms up.
The report will be used in the monetary policy meeting of the Federal Open Market Committee scheduled for April 29 and April 30.
Eight of the 12 Fed regions surveyed reported “modest or moderate” economic growth during the period. Chicago reported a pickup in growth, while New York and Philadelphia reported rebounds from weather-related slowdowns earlier in the year. Only the Cleveland and St Louis districts, in the heart of the storm-battered US Midwest, said that growth slackened.
Consumer spending, the lifeblood of growth representing two-thirds of US activity, strengthened in most districts, “as weather conditions improved and foot traffic returned,” the report said.
Manufacturing, the key sector in US industrial production, improved in most districts. Several districts reported the impact of winter weather was “less severe” than earlier this year.
In the recovering housing market, home prices increased modestly and inventory remained tight across most regions.
The labor market, a primary concern of the Fed as it gauges how quickly to tighten its monetary policy, revealed “conditions were mixed but generally positive,” the report said.
Inflation, the second pillar of the Fed’s dual mandate of maximum employment and price stability, continued to tread well below the Fed’s 2 percent target, it said.
US Federal Reserve Chair Janet Yellen said the committee’s outlook for continued, moderate growth was little changed from last fall, despite some negative data.
“The unusually harsh winter weather in much of the nation has complicated this judgement, but my [committee] colleagues and I generally believe that a significant part of the recent softness was weather-related,” Yellen said at the Economic Club of New York.
Yellen said that inflation is expected to rise slowly from current low levels, but not go much beyond the Fed’s target, in part because of slowing energy price rises and a fall in import prices.
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