The Federal Reserve said economic growth slowed in a few key regions of the United States from September through early October, as businesses grew worried about a budget impasse that led to a partial government shutdown.
Overall growth continued at a modest to moderate pace, according to the Fed survey released Wednesday. Eight of the Fed's 12 banking districts, including the one that includes Florida, reported the same growth rate reported in August through early September. But four districts – Philadelphia, Richmond, Chicago and Kansas City – reported that growth had slowed.
Known as the Beige Book, the report offers anecdotal summaries of economic conditions from throughout the country. The dispatches come from confidential interviews Fed officials, including those based in Miami, conduct with businesses.
The newest Beige report said businesses around the country remained optimistic about the future and consumer spending continued to increase, helped by strong auto sales. But many businesses noted increased uncertainty because of the partial federal shutdown, which began on Oct. 1, and a looming deadline to raise federal borrowing limit. Congressional leaders said they expected the shutdown and borrowing impasses to end this week with compromise legislation.
Boston, in particular, reported that the tourism industry was worried about the impact of a prolonged shutdown. And several Districts reported that businesses were cautious about hiring. The report covered covered interviews through October 7.
The report from the southeastern Atlanta district, which includes Florida, did not mention the shutdown. But federal spending was still a concern. The summary of the tourism industry, usually produced by the Fed’s Miami branch, seemed to reference ongoing cutbacks in federal travel — a trend that has been underway well before the Oct. 1 shutdown began.
Saying tourism businesses were seeing “healthy demand,’’ the report noted: “However, government cut backs and softening demand from Europe and China were sources of concern for many hospitality firms.”
Florida’s real estate market received higher marks than did the markets in the rest of the Southeast.
“Overall, District brokers indicated that existing home sales remained ahead of last year's level,’’ the report stated. “In particular, home sales growth continued to improve among Florida brokers while brokers outside of Florida noticed that sales growth remained positive but slowed notably on a year-over-year basis. Brokers also noted a larger than usual seasonal slowdown in buyer traffic.”
Senate leaders announced Wednesday that they had an agreement to avert a threatened Treasury default and reopen the government after the 16-day shutdown. The House was likely to approve the measure, too, leading many to anticipate passage in both chambers before the end of the day.
The Beige Book will be used by central bank policymakers in their next meeting on Oct. 29-30. Economists believe the Fed maintain its $85-billion-a-month in bond purchases to offset the impact of the shutdown.
Miami Herald staff writer Douglas Hanks contributed to this report from The Associated Press.