Fed's Beige Book reports 'modest or moderate' growth across US

January 17, 2013

The Hill

Bernie Becker

The economy has grown throughout the U.S. in recent weeks, the Federal Reserve said Wednesday.

The Fed’s newest “Beige Book” said that the Northeast has rebounded from last year’s Hurricane Sandy, that retail sales in the holiday season were higher than in 2011 and that each of the central bank’s districts had reported some growth in consumer spending.

“Economic activity has expanded since the previous Beige Book report, with all 12 districts characterizing the pace of growth as either modest or moderate,” the Fed said.

But the Beige Book, a collection of anecdotes from across the country, also notes that uncertainty about the future of U.S. fiscal policy remains a drag on the economy.

The book reported, for instance, that half of the districts found defense manufacturing and other sectors had delayed hiring because of the recent “fiscal cliff,” even as labor market conditions remained largely the same. 

Retailers and car dealers also expressed concern about future sales, because of the fiscal uncertainty.

In its deal to extend most Bush-era tax rates, Congress also delayed the automatic spending cuts for 2013 that would have especially targeted the defense sector. The debt ceiling, the rest of the sequester cuts and an agreement to fund the government will likely all have to be dealt with before the end of March, which will require further fiscal negotiations.

Policymakers on both sides of the aisle would like to see further economic growth, with the economy having created some 155,000 jobs in December and the jobless rate sticking at 7.8 percent. 

The Fed is currently buying billions of dollars a month in Treasury bonds, and has said it will keep interest rates near zero until unemployment reaches 6.5 percent. 

The Beige Book also reported that tourism increased throughout much of the country, while the manufacturing outlook was mixed. Real estate activity was moderate to strong in nine of the 12 districts. 

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