The U.S. economy grew at a modest pace in recent weeks, with manufacturing buffeted by a global slowdown while consumer purchases gave mixed signals on the strength of household spending, the Federal Reserve reported on Wednesday.
The ongoing U.S.-China trade war loomed prominently in the U.S. central bank's latest Beige Book compendium of anecdotes from companies around the country, with several of its districts reporting the conflict was weighing on business.
The report, released ahead of the Fed's Sept. 17-18 policy meeting when central bankers are widely expected to cut interest rates to counter the economic slowdown, suggested that U.S. businesses do not expect a recession soon.
"Although concerns regarding tariffs and trade policy uncertainty continued, the majority of businesses remained optimistic about the near-term outlook," according to the Fed's report.
The central bank said growth in employment appeared to be "modest" in recent weeks, a pace that was "on par with the previous reporting period."
But manufacturing activity was slightly weaker than during the previous period, the Fed said.The report detailed a host of concerns by businesses about tariffs, including the prospect that uncertainty over the direction of trade policy could dampen investment.In the Fed's Boston district, which includes much of New England, "tariffs continued to be a minor but persistent pricing issue for manufacturers."
America's trade conflicts are also compounding problems faced by farmers, the report said. "Agricultural conditions remained weak as a result of unfavorable weather conditions, low commodity prices, and trade-related uncertainties," according to the report.
The central bank's business contacts mostly reported ongoing growth in consumer spending, the main engine for U.S. economic growth, which has appeared strong in recent months despite the global slowdown.
But some parts of the country appeared to be less robust.
In the St. Louis district, which covers a swath of the Midwest and South, "reports from general retailers and auto dealers indicate consumer activity has been mixed since our previous report." The Minneapolis district reported that consumer spending was flat, while the Atlanta district noted that consumer loan growth declined.
The Beige Book was compiled by the Atlanta Fed from reports assembled from all 12 of the Fed's regional banks through Aug. 23.