Fed says economy, jobs outlook improving
WASHINGTON (Reuters) - The U.S. economy strengthened as the year drew to a close, according to a report from the Federal Reserve on Wednesday that cited rising employment levels across the country.
The Fed's Beige Book report, based on anecdotal reports collected from the business contacts of the central bank's regional branches, painted an increasingly bright, if cautious, picture.
While real estate markets, at the heart of the deepest recession in generations, remained predictably weak, manufacturing contacts sounded more upbeat.
The Fed reported better conditions across all 12 of its districts, though banking and financial services showed results that varied by region.
"Economic activity continued to expand moderately from November through December," the central bank said in a statement.
The findings were consistent with a recent pick-up in U.S. economic data that has prompted some economists to beef up their forecasts for growth in the first half of 2011.
The U.S. economy grew 2.6 percent in the third quarter, a level considered too meek to put a significant dent in the nation's 9.4 percent jobless rate.
Against that backdrop, the Fed announced in November it would buy an additional $600 billion in bonds over an eight month period in order to support the recovery by keeping long-term borrowing costs low.
Market interest rates have risen sharply since then despite the purchases, though policymakers have argued they might have risen even further without Fed action.
The improvement in conditions in the Beige Book report strengthens the case, made both by some top Fed officials and outside economists, that the latest round of bond-buying might not be necessary.
Fed Chairman Ben Bernanke, however, has argued that the economy is running so far beneath its full potential that it continues to need help from the monetary authorities.
The central bank has cited both weak employment conditions and very low inflation readings to justify its actions.