Fed says economy growing at moderate pace


WASHINGTON, D.C. — There is little evidence that cutbacks in federal government spending were slowing down the economy, the Federal Reserve said Wednesday.

Instead, the Beige Book released by the Fed, covering the period from early April to late May, said the economy maintained the “modest to moderate” pace that has been in place so far this year.

Of the Fed’s 12 district banks, the only outlier was Dallas, which reported “strong” growth.

The Beige Book data, with the report of steady if not spectacular growth, might be one reason that Fed Chairman Ben Bernanke has suggested the central bank could reduce the pace of its bond-buying program in a “few” meetings, subject to economic data. There has been concerned that the economy would suffer a summer swoon, as it has done for the past few years.

This year’s culprit was expected to be sequestration, the across-the-board spending cuts that Congress allowed to take place in March.

But sequestration was only mentioned a few times: Boston and Richmond districts reported cutbacks in defense activity due to the cuts.

Atlanta reported that budget cuts had not hurt the hospitality industry.

In fact, the tourism industry remains a pillar of strength in many regions.

The report said that manufacturing continued to expand in most districts.

One area of some concern could be consumer spending. The report showed that seven of the 12 districts reported only “slight” sales growth. Three reported modest or moderate gains. New York reported sales were tepid, and Richmond said sales were flat.

Residential housing and construction activity was either moderate or strong across the country.

Reports about the labor market seemed more upbeat, with hiring “at a measured pace” in several districts and some contacts reporting trouble in finding qualified workers.

The Minneapolis Fed wrote this Beige Book. That duty is rotated between the 12 Fed districts.