Tallahassee Journal

Fed: Economy continues to expand modestly

Fed: Economy continues to expand modestly

The U.S. economy grew at a “modest” to “moderate” pace last month as holiday sales were sluggish in some regions and the plunge in oil prices began to take a toll on activity in the Dallas area, the Federal Reserve said Wednesday. Auto sales and travel and tourism were sources of strength and manufacturing expanded from mid-November through late December, the Fed said in its Beige Book, named for the color of its cover.Federal Reserve Building

But the housing market continued to struggle and consumer spending increased just modestly despite tumbling gasoline prices, echoing the disappointing December retail sales reported by the government Tuesday. Although the economy in most Fed bank districts grew, the pace of growth slowed in the Dallas area and was described as “slight” in the Kansas City region.

A moderate pickup in holiday sales beat estimates in the Chicago area. And high-end merchandise moved briskly in the Philadelphia and San Francisco districts. But retailers in Boston, Dallas, Philadelphia and Cleveland reported “slight to modest gains” and general merchandise stores in the New York area said holiday sales were sluggish. Auto sales, however, picked up moderately in Philadelphia, Cleveland and Dallas and sharply in Atlanta and Chicago, as lower gas prices lifted purchases of larger vehicles.

Travel and tourism also was a bright spot, with activity accelerating in the Boston, Atlanta and San Francisco regions and Broadway theater revenue rising more than 10% compared to 2013. Manufacturing activity grew moderately in the Boston, New York, Chicago and San Francisco areas. But a Boston manufacturer said a labor dispute causing congestion at West Coast ports hampered exports. Factory activity increased modestly in Philadelphia and new orders “suggested some further slowing moving forward.”

Auto production, however, remained strong in the Chicago area. Nationally, industrial output has surged recently but some economists are expecting a slowdown as a strong U.S. dollar hinders exports. The housing market continued to struggle for momentum. Single-family home sales and construction “were largely flat,” the Fed said. Sales fell vs. the year-ago period in many areas, including Boston, Cleveland, Atlanta, Chicago, Minneapolis, Kansas City and Dallas.