By Alister Bull
WASHINGTON Jan 16 Economic activity across the
United States expanded at either a moderate or modest pace in
recent weeks with consumer spending picking up, the Federal
Reserve said on Wednesday, suggesting little change in terms of
the recovery's strength.
The U.S. central bank painted a cautiously positive picture
of an economy gathering steam across its 12 districts, although
businesses and consumers were wary due to uncertainty over
fiscal policy and conditions on the other side of the Atlantic.
"Hiring plans were more cautious for firms doing business in
Europe or in the defense sector," the Fed noted in its Beige
Book report. It was compiled by the Federal Reserve Bank of
Philadelphia based on data collected on or before Jan. 4, 2013.
U.S. lawmakers agreed to hold taxes down for all American
families who earn less than $450,000, but must still negotiate
an increase in the U.S. debt ceiling and measures to set aside
deep automatic spending cuts, currently due to bite on March 1.
"Reports from the twelve Federal Reserve Districts indicated
that economic activity has expanded since the previous Beige
Book report, with all twelve Districts characterizing the pace
of growth as either modest or moderate," the Fed said.
The previous report found that the economy had jogged along
at a "measured" pace.
The Fed has taken bold steps to boost the U.S. recovery and
says it will hold interest rates near zero until unemployment
reaches 6.5 percent, from current lofty levels of 7.8 percent,
provided inflation does not breach a threshold of 2.5 percent.
Fed officials predict the U.S. economy will grow by between
2.0 percent to 3.2 percent this year, but they are less
optimistic on the prospects for employment, with forecasts for
fourth-quarter unemployment ranging from 6.9 percent to 7.8
Policymakers have promised to maintain an aggressive
bond-buying program until the outlook for the labor market
In the current Beige Book, the Fed highlighted areas of
improvement, most notably in the real estate sector and consumer
spending. Manufacturing, on the other hand, was more mixed.
"The manufacturing outlook remained generally optimistic;
however, capital spending plans were less uniformly positive,"
the Fed said. A sustained upswing in business investment has
been one of the components missing so far from a more pronounced
improvement in growth and pick-up in hiring.