US economic growth 'modest to moderate': Fed Beige Book

Reports from the Fed’s 12 districts across the country “generally described modest to moderate economic growth” — a pace similar to that described in early September, the new report said.

Six of the regions reported “moderate” activity, five called it “modest” and the Boston district in the Northeast said it was “mixed.”

The report, which is used by the Federal Open Market Committee to help shape monetary policy, showed little change in the area of most pressing concern for the central bank: unemployment.

Even with the unemployment rate falling to a six-year low of 5.9 percent in September and a solid run of job growth this year — an average of 227,000 jobs each month — there were still 9.3 million people officially unemployed.

The falling jobless rate has masked a high level of underemployed workers and a large number of people who have dropped out of the labor market altogether.

In the latest Beige Book, employment was described as continuing to expand at about the same pace as described in the previous report.

“Most districts reported that some employers had difficulty finding qualified workers for certain positions,” the report said.

A number of districts described overall wage growth as “modest”, but said there were upward wage pressures for certain industries and occupations, such as skilled labor in construction and manufacturing.

Manufacturing activity had increased in most districts, the report said.

Inflation remained tame as the Fed has kept its key interest rate near zero since late 2008 in a bid to lower longer-term rates and boost economic growth.

“Consistent with the previous Beige Book, price pressures remained subdued, with districts reporting little to no change in price levels or modest increases,” the report said.

The Beige Book report on current economic conditions came ahead of the next meeting of the policy-setting Federal Open Market Committee.

The FOMC has signaled that it would stop the central bank’s massive asset-purchases program at the October 28-29 meeting. -AFP