Fed’s Beige Book reflect “modest” growth, step down from “moderate”

The Federal Reserve said today that the U.S. economy was expanding “modestly” last month, supported by improvements in housing and auto sales, even as the labor market showed little change.

“Consumer spending was generally reported to be flat to up slightly since the last report,” the Fed said in its Beige Book business survey, which is based on accounts from the 12 district Fed banks. Conditions in manufacturing were “somewhat improved,” according to the report, which provides anecdotal evidence on the health of the economy two weeks before the Federal Open Market Committee meets in Washington on Oct. 23-24.

Total U.S. auto sales also outpaced analyst estimates last month, with vehicles selling at an annualized rate of 14.9 million in September, above an estimated 14.5 million.
Fed to Continue Easing in December, Swonk Says

Diane Swonk, chief economist at Mesirow Financial Holdings Inc., talks about the Federal Reserve’s Beige Book business survey released today and the outlook for Fed monetary policy and the U.S. economy. She speaks with Mark Crumpton on Bloomberg Television’s “Bottom Line.”

The Beige Book provides support for Fed Chairman Ben S. Bernanke’s view that economic growth isn’t strong enough to bring about a quick healing of the labor market. A Labor Department report last week showed that while the unemployment rate unexpectedly declined in September, payroll growth slowed.

The Fed on Sept. 13 announced a third round of quantitative easing, with purchases of $40 billion a month of mortgage debt, and said its benchmark interest rate was likely to stay low through the middle of 2015.

The report’s description of the economy is not as positive as Beige Books earlier in the year, which used the word “moderate” to describe the pace of expansion, said Dana Saporta, U.S. economist at Credit Suisse Group AG in New York. “In Fed parlance, modest is a step down from moderate,” she said.

Via – Bloomberg

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