GO
Loading...

Fed's Beige Book: US economy expands at modest to moderate pace

The Federal Reserve in Washington
Jay Mallin | Bloomberg | Getty Images
The Federal Reserve in Washington

The economy grew at a "modest to moderate" pace over the past month, though concerns over the fiscal impasse in Washington were a concern, according to the latest economic observations from the Federal Reserve.

Various Fed officials from around the nine districts said they are "cautiously optimistic" about growth but there was "an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate.

Growth in particular came from real estate and auto sales, according to the Beige Book report.

The report found that consumers were spending, payrolls grew and travel and tourism also got a boost. Nonresidential construction was a bit slower.

(Read more: Wall Street notlistening to Washington anymore)

Eight of the 12 Fed districts reported solid growth, were Philadelphia, Richmond, Chicago and Kansas City said "growth slowed some."

"Despite being peppered with concerns over the impact of the shutdown the report still conveys an upbeat tone," Andrew Wilkinson, chief economic strategist at Miller Tabak, said in a note.

The report comes as Washington tries to iron out the final details on a budget deal that would reopen the government and avoid a dreaded debt default.

It also follows the September Fed meeting during which the Open Markets Committee unexpectedly decided not to begin withdrawing its $85 billion a month bond-buying program known as quantitative easing.

(Read more: Buffett: Debt limit is 'weapon of mass destruction')

In addition to a program that has swelled the central bank's balance sheet to $3.8 trillion, the Fed has kept its target interest rate near zero. The Fed has tied targets in employment and inflation to stimulus withdrawal.

The most recent district survey found "employment growth remained modest in September," according to the Beige Book.

Under normal circumstances, the government would have quantified the employment situation by now. But the government shutdown has prevented the Bureau of Labor Statistics from releasing its monthly nonfarm payrolls report, clouding the economic picture.

In other areas, the Fed used "modestly" to describe growth in consumer spending and tourism; business spending and hiring; nonfinancial services and manufacturing. Construction and real estate "continued to improve," banking and finance conditions were "little changed" while weather hampered agriculture in some areas.

Inflation pressure from prices and wages "remained limited," the Fed said.

(Get the full report here.)

_ By CNBC's Jeff Cox. Follow him @JeffCoxCNBCcom on Twitter.

Featured

Contact Economy

  • CNBC NEWSLETTERS

    Get the best of CNBC in your inbox

    › Learn More