Fed: Most U.S. regions showing moderate growth

The Federal Reserve building in Washington / Mark Wilson/Getty Images

WASHINGTON Stronger housing markets helped boost economic growth at the end of the summer in nearly every region of the United States, according to a Federal Reserve survey released Wednesday.

The Fed said growth improved in 10 of its 12 regional banking districts from mid-August through September, while leveling off in one region and slowing in another. Rising home sales helped lift home prices in most districts.

The report, known formally as the Beige Book, also cited an increase in auto sales in most parts of the country. Still, consumer spending was flat or up only slightly in most districts. Manufacturing activity was mixed, with half of the districts reporting slight improvement since the previous Fed report. And hiring was unchanged in most districts.

• Unemployment rate drops to 7.8 percent
• Fed chose mortgage bonds to bolster housing gains
• Bernanke defends Fed rate policies, cautions Congress

The Beige Book provides anecdotal information on business conditions around the country. The information collected by the Fed's 12 regional banks will be used as the basis for the Fed's policy discussion at the Oct. 23-24 meeting.

Economists expect no major moves at the meeting because the Fed adopted aggressive new policies in September.

The Fed is buying mortgage bonds to lower longer-term rates, which could spur more borrowing and spending. And the Fed plans to keep short-term interest rates near zero until at least mid-2015, even after the recovery shows signs of strengthening.

By making borrowing cheaper, the Fed hopes to fuel the modest housing recovery. When home prices rise, people tend to feel wealthier and spend more freely. Consumer spending drives nearly 70 percent of economic activity.

Consumers have been cautious this year with spending, which has contributed to slower growth. The economy grew at a lackluster 1.3 percent annual rate in the April-June quarter, down from the 2 percent rate in the first three months of the year.

Economists expect growth to hover near 2 percent for the rest of the year. That's typically too weak to create enough jobs to rapidly bring relief to more than 12 million unemployed Americans.

The job market is looking a little better. The unemployment rate fell last month to 7.8 percent, down from 8.1 percent in August. It was the first time in more than 3 1/2 years that the rate fell below 8 percent. And it fell because of a huge increase in the number of people who said they found jobs.

There have been some other encouraging signs. Auto sales rose in September by 13 percent from a year earlier to nearly 1.2 million. Home sales have been posting solid gains. And consumer confidence jumped in September, according to two closely watched surveys.

[keithmaz]

Someone had to do an Ode to QE3......no one did, so I did. It may not be very good but I think it certainly fits.

http://www.youtube.com/watch?v=n6JGAHXO_6g&feature=youtu.be

[get_down]

"Consumer spending drives nearly 70 percent of economic activity. Still, consumer spending was flat or up only slightly in most districts. And hiring was unchanged in most districts." My saving account with a balance of 12K earned me 1 dollar for the month of May, 99 cents for the month of June, 1.02 for the month of July, 1.07 for the month of August and 1.06 for the month of September - i.e. $5.14 interest for 5 whole months. What a genius Federal Reserve Chairman Mr. Ben Bernanke who kept the key interest rate close to zero since 2008 and he's even stubborn enough to pledge that he'll keep that low interest rate to at least mid-2015 no matter what! I believe if I hold my breath long enough till mid-2015 I'll probably earn up to 40 bucks - enough for me to make a spending spree at the McDonald's. Credit has to go to Mr. Obama for awarding Second term to Mr. Ben Bernanke as the FRC. Coming November, I think I'll vote for someone else for "Change and Hope" NOT "Moving Forward" which would be HOPELESS!

[get_down]

"By making borrowing cheaper, the Fed hopes to fuel the modest housing recovery. When home prices rise, people tend to feel wealthier and spend more freely. Consumer spending drives nearly 70 percent of economic activity." That kind of wishful thinking was casing the economic woes in the First place - that during the housing boom period, people started living large - lived way out of their means - e.g., buying big houses, driving expensive brand-new SUVs, purchased big-screen TVs, acquired multiple IPhones and spent a lot of time talking nonsense...etc and look what got us? On the other hand, during my tenure of more than 29 years working for the same IT Company, I recently retired and am living on my pension and my Social Security benefit - driving a 198x Buick Station Wagon, still have my land-line phone, no big-screen TV, no IPhone nor any video games and can afford to eat at any restaurant that my better-half picks. Even though I've accumulated close to one Mill of assets, I don't feel wealthier - because I'm aware of just around the corner, the tax people will have no trouble jack up my property tax, insurance rate and last but not the least my medical insurance. I'll never "spend more freely" under any circumstances.