Fed says economy mostly stronger in March
WASHINGTON (Reuters) - Economic activity strengthened in most U.S. regions during March and early April with the exception of St. Louis, where plans to close several plants were announced, the Federal Reserve said on Wednesday.
"Overall economic activity increased somewhat ... across all Federal Reserve districts except St. Louis, which reported 'softened' economic conditions," the Beige Book summary prepared by the Minneapolis regional Fed bank said.
The Beige Book, so named for the color of its cover, is an anecdotal collection of reports from all 12 Fed districts. The latest one is based on information collected before April 5 and will be used by central bank policymakers when the Federal Open Market Committee meets April 27-28 to mull monetary policy.
Retail sales and sales of new cars and trucks rose in most areas and many areas said housing activity increased, though from very low levels. Notably, commercial real estate market activity remained "very weak" across the country.
The Beige Book's tone underlined the muted nature of the economic recovery.
"While labor markets generally remained weak, some hiring activity was evident, particularly for temporary staff," it said. "Wage pressure were characterized as minimal or contained."
Earlier on Wednesday, Fed Chairman Ben Bernanke told Congress that policymakers expect to keep U.S. interest rates low for a long time and refused to rule out the possibility that the economy could slip back into recession.
Daniel Egan, president of Massachusetts Credit Union League in Marlborough, MA, said the report and Bernanke's testimony pointed to an economy that was treading water at best because so many people are out of work or underemployed.
"It all comes back to jobs," Egan said. "We're trying to replace eight million lost jobs and until we can get some kind of sustained job growth we're not going to be able to get a sustained recovery."
The Beige Book said that loan volumes and credit quality decreased in most parts of the country last month and described banking and financial sector performance as mixed.
On a more positive note, it said manufacturing was stronger nearly everywhere except in the St. Louis district and new orders showed a pickup. The St. Louis Fed said there were more plant closings and layoffs than there were openings and hires.
"Firms in the construction materials, auto parts, and food and beverage manufacturing industries announced plans to close a plant in the district," the St. Louis Fed said.