US economy resumed growth after Q1 stall: Fed
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.