The U.S. economy strengthened in all regions of the country in July and August, in areas from consumer spending to auto sales to tourism, the Federal Reserve reported in a survey released Wednesday.
All 12 of the Fed’s regions reported growth. Six – New York, Cleveland, Chicago, Minneapolis, Dallas and San Francisco – characterized growth as “moderate.” The other regions reported somewhat slower expansion. Four described growth as “modest,” — including the Atlanta district, which includes South Florida. Two noted signs of improvement.
The survey found no clear evidence that the economy is expanding so fast that the Fed might soon need to begin raising interest rates to prevent inflation.
Most regions reported optimism about key economic sectors. A majority cited increased loan demand, for example, and hotel occupancies.
The survey, known as the Beige Book, is based on anecdotal reports from businesses and will be considered with other data when Fed policymakers next meet Sept. 16-17.
After that meeting, economists think the Fed will reduce its monthly bond purchases for a seventh time but will leave its key short-term rate unchanged. That rate has been near zero since December 2008. The Fed has kept rates ultra-low to try to reduce high unemployment and energize a sluggish recovery.
Now, with job growth strong and unemployment falling, investors have been speculating about when the Fed will start raising rates. Most analysts think the first increase will occur around mid-2015.
At its September meeting, the Fed is expected to reiterate that rates will remain low “for a considerable time” after the bond purchases end. Those purchases are set to end in October.
In a speech last month at a Fed conference in Jackson Hole, Wyoming, Yellen offered no clarity on the timing of the first rate hike. She continued to note that by some measures, the job market remains less than healthy: Pay growth is weak, for example, many people have been unemployed for more than six months and others who are working part time would prefer full-time jobs.
The Fed survey said trends in employment, wages and inflation had remained “relatively unchanged” in the past two months. It did note that wage pressures are greater in sectors where there are shortages of skilled labor.
In the Atlanta district, residential brokers and builders noted that sales are ahead of last year during the same period and noted shortages of construction workers, though banks remain cautious about lending for mortgages. Tourism remained strong, with both occupancy and rates above last year.
The report also cited shortages of truck drivers in New York and skilled information technology workers in Boston. It said business contacts in Dallas reported that the job market remained “very tight” in the energy sector.
Consumer spending was reported to be growing at rates ranging from slight to moderate in most districts, with some areas noting record-high levels of auto sales.
Tourism was reported to have increased throughout much of the country. But manufacturing, the report said, could be divided into three groups – expanding, contracting or unchanged.
Sales of previously owned homes and construction of new homes was either expanding or holding steady in about half the country.