US econ­omy re­sumed growth af­ter Q1 stall: Fed

The China Post - - INTERNATIONAL -

The U.S. econ­omy cranked back into mid­dle gear dur­ing April and May af­ter stalling in the first quar­ter of the year, the Fed­eral Re­serve’s Beige Book re­gional sur­vey said Wed­nes­day.

Con­sumer spend­ing played a big part in the re­bound, it said, as did con­struc­tion and tourism.

Re­spon­dents to the re­gional sur­vey, which helps shape Fed pol­icy de­ci­sions, “were gen­er­ally op­ti­mistic” in their out­look, ex­pect­ing growth to con­tinue or pick up.

But the re­port also showed the re­cov­ery from the Jan­uary-to-March down­turn was spotty from re­gion to re­gion, sug­gest­ing some resid­ual weak­ness af­ter the win­ter slump.

The re­port char­ac­ter­ized over­all growth as “mod­est” to “mod­er­ate,” which is how the Fed gen­er­ally de­scribed the econ­omy through­out 2014.

Most of the Fed’s 12 dis­tricts re­ported gains in con­sumer spend­ing, in­clud­ing on cars and homes; in con­struc­tion; and in travel and tourism.

Some of that was at­trib­uted to the boost to house­hold in­comes from lower gaso­line prices af­ter the oil price crash.

The com­ments on con­sumers were re­as­sur­ing, af­ter a se­ries of re­ports show­ing that Amer­i­cans were largely sav­ing any new money they were tak­ing in, rather than spend­ing it.

But cheap oil also took a toll on the hubs of the petroleum in­dus­try, where drillers and ser­vice com­pa­nies have been laid off thou­sands.

That con­trib­uted to slug­gish growth in two key oil re­gions: the Fed’s Dal­las, Texas dis­trict, and the Kansas City dis­trict just to the north, which in­cludes Ok­la­homa.

The Beige Book sur­vey, which cov­ered roughly six weeks to late May, showed the econ­omy com­ing back af­ter it con­tracted 0.7 per­cent in the first three months of the year, due to a com­bi­na­tion of the ef­fects of harsh win­ter weather in some ar­eas and the grind­ing port slow­down on the west coast.

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