Fed survey: Housing lifts growth in most US regions
WASHINGTON — Stronger housing markets helped boost economic growth at the end of the summer in nearly every region of the United States, according to a Federal Reserve survey.
The Fed said in the report issued last week that growth improved in 10 of its 12 regional banking districts from mid-August through September, while leveling off in one region and slowing in another. Rising home sales helped lift home prices in most districts.
The report, known formally as the Beige Book, also cited an increase in auto sales in most parts of the country. Still, consumer spending was flat or up only slightly in most districts. Manufacturing activity was mixed, with half of the districts reporting slight improvement since the previous Fed report. And hiring was unchanged in most districts.
Sal Gauatieri, senior economist at BMO Capital Markets, said the August report represents a subtle shift in the central bank’s outlook. The economy improved to growing “modestly,” he noted, from growing only “gradually” in the previous report.
The Beige Book provides anecdotal information on business conditions around the country. The information collected by the Fed’s 12 regional banks will be used as the basis for the Fed’s policy discussion at the Oct. 23-24 meeting.
Economists expect no major moves at the meeting because the Fed adopted aggressive new policies in September.
The Fed is buying mortgage bonds to lower longer-term rates, which could spur more borrowing and spending. And the Fed plans to keep short-term interest rates near zero until at least mid-2015, even after the recovery shows signs of strengthening.
By making borrowing cheaper, the Fed hopes to fuel the modest housing recovery. When home prices rise, people tend to feel wealthier and spend more freely. Consumer spending drives nearly 70 percent of economic activity.
The Fed report noted that oil production hit a record high in South Dakota, while the Minneapolis, Kansas City and Dallas districts also saw robust gains in energy production. The Atlanta and Richmond districts reported record levels for port activity in their regions.
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