Fed Beige Book Reports Modest, Uneven U.S. Growth

By Agence France-Presse The U.S. economy is growing at a modest, uneven pace with some sectors improving while others deteriorate, the Federal Reserve Beige Book survey said June 12. "Reports from Federal Reserve Districts indicated that overall economic activity expanded at a moderate pace in late April and May," said the closely watched report. "The tone was one of modest but uneven growth, with some major sectors showing signs of improvement while others softened or remain weak," it said. Retail sales were flat in most areas and auto sales were mixed, the report said. Services and manufacturing sectors improved but varied according to region. Labor markets were slack in most areas. The Beige Book survey summarizes information collected by the 12 districts of the Federal Reserve System. It is released eight times a year. Federal Reserve chairman Alan Greenspan said last week he believed the U.S. economic recovery was going through a soft spot although the signs appeared to be increasingly positive. The powerful Federal Reserve boss said the inflation outlook was remarkably subdued, but the economic rebound would be limited by the moderate pace of the downturn. U.S. consumers have steadily kept up the pace of expenditure throughout the economic recovery. But the missing ingredient has been a sustained increase in business investment. The Beige Book said most districts reported retail sales similar to the levels of a year earlier although automobile sales were uneven. And services posted modest growth. Manufacturing posted some gains. "Factory production, shipments and orders were higher in most districts but the gains were uneven across industries," said the Federal Reserve report. Contacts in San Francisco had indicated a pickup in new orders and sales in the semiconductor industry. The job market lagged, however. "Labor market conditions improved marginally but remained slack overall," the Federal Reserve report said. "As a consequence, reports cited little upward pressure on wages." The U.S. unemployment rate declined two-tenths of a point to 5.8% in May, latest data show. Prices generally were subdued. Exceptions included steel prices, which rose sharply. Insurance prices also were a concern in five of the Federal Reserve districts. Copyright Agence France-Presse, 2002