Federal Reserve: Retail sales boost economy

(AP) WASHINGTON - The Federal Reserve says the U.S. economy grew moderately in July and early August, and that hiring was more robust than in the previous six-week period.

Pictures: Top 10 U.S. cities for job growth

A Fed report on business conditions released Wednesday said nine of its 12 districts experienced growth that was "modest" or "moderate." That's roughly in line with the conditions described in the previous report.

Strength in auto sales, tourism and home sales in July and early August offset weakness in manufacturing.

What do Americans think of the rich?
Will Bernanke launch QE from Wyoming?
Markets stall as traders await Fed chief speech

The report comes two days before Fed Chairman Ben Bernanke speaks to an annual conference of economists in Jackson Hole, Wyo. Financial markets will be listening for any signals about whether the Fed might take action to stimulate the economy at its next policy meeting on Sept. 12-13.

The economy is still struggling to gain traction more than three years after the end of the Great Recession in June 2009. The Fed report said that six of its districts reported weaker demand in manufacturing. And it highlighted concerns about a severe drought affecting cotton, soybean and corn crops in its Chicago, St. Louis and Kansas City districts.

The report, known as the Beige Book, is released eight times a year and is based on information the Fed's 12 regional banks gather from business contacts around the country.

At its last policy meeting on July 31-Aug. 1, the Fed took no action. But minutes from that meeting signaled that Fed officials could act in September, possibly by launching a fresh round of bond buying. The goal of such a program would be to lower long-term interest rates to encourage more borrowing and spending.

The minutes of that meeting showed that Fed officials spoke with increased urgency about the need to provide more help for the U.S. economy. The minutes said that many officials felt further support would be needed "fairly soon" unless the economy improves significantly.

The Fed has already sought to drive down long-term rates by buying more than $2 trillion in Treasury bonds and mortgage-backed securities in two previous rounds of bond purchases. These purchases are known as "quantitative easing."