Sept. 8 (Bloomberg) -- The Federal Reserve said the U.S. economy maintained its expansion while showing “widespread signs of a deceleration” in mid-July through the end of August, according to a survey by 12 regional Fed banks. Five regional banks reported “economic growth at a moderate pace” and two pointed to “positive developments or net improvements.” The remaining five banks said conditions were mixed or decelerating.
The report underscores the Fed’s view that while the recovery from the worst recession in seven decades has cooled, the economy isn’t relapsing into a contraction. In a speech last month in Jackson Hole, Wyoming, Fed chairman Ben S. Bernanke said “the preconditions for a pickup in growth in 2011 appear to remain in place.”
In the previous Beige Book, released July 28, the Fed said “economic activity has continued to increase, on balance.” Two Fed districts reported the economy “generally held steady,” while two others said the pace of growth “had slowed recently.”
The regional survey, published two weeks before the Federal Open Market Committee next meets Sept. 21, offers anecdotal evidence that will help central bankers determine whether more stimulus is needed to reduce a jobless rate stuck near a 26-year high and protect a recovery from the deepest recession since the 1930s.
The New York Fed reported “signs of decelerating” in the district, including “further deceleration” in manufacturing. The Philadelphia region said business conditions were “mixed,” while the Richmond Fed said “signs of slowing or contracting economic activity became more prevalent.” The Atlanta region’s economy “continued to slow” and Chicago’s “moderated” in July and August, the Beige Book said.
Widespread Signs
Reports received by regional Fed banks “suggested continued growth in national economic activity during the reporting period of mid-July through the end of August, but with widespread signs of a deceleration compared with preceding periods,” today’s report said.
The report showed that manufacturing maintained its expansion while showing signs of slowing. Consumer spending “appeared to increase on balance,” though shoppers were limiting purchases of non-essential items. Home sales were “very low” or “declining” in most Fed districts following the expiration of a government tax credit.
Caterpillar Inc. may add as many as 9,000 workers worldwide this year, Doug Oberhelman, chief executive officer of the Peoria, Illinois-based company, said last month in a New York meeting with analysts. Caterpillar has added 3,650 employees globally this year as production increased. About 1,250 of those have been in the U.S.
Limited Wage Pressure
Wage pressures were limited, the Fed said, though some districts “noted increased upward pressures in a narrow set of sectors experiencing a mismatch between job requirements and applicant skills.”
Private employers added 67,000 jobs in August, more than forecast, and the jobless rate rose to 9.6 percent as more people looked for work. Total payrolls, including government agencies, shrank by 54,000, reflecting the dismissal of temporary workers hired to conduct the 2010 census.
