U.S. economic growth uneven, Fed survey says

WASHINGTON - The U.S. economy grew unevenly in early fall, with more than half the regions of the country expanding modestly while others struggled to grow.

A survey by the Federal Reserve released on Wednesday found seven of the Fed's 12 regions reported moderate improvements in business activity. Three regions - Philadelphia, Richmond and Cleveland - described economic activity as mixed or steady. Only two - Atlanta and Dallas - suggested economic growth was slow.

The survey indicated that the economy isn't weakening but is growing too sluggishly to drive down high unemployment, now at 9.6 percent. The jobless rate has been at or above 9.5 percent for more than a year.

"Hiring remains limited, with many firms reluctant to add to permanent payrolls given economic softness," the Fed survey concluded.

High unemployment is one of the Fed's biggest concerns. That's why Fed Chairman Ben Bernanke and his colleagues are widely expected to launch a new program at their Nov. 2-3 meeting to bolster the economy. The Fed is expected to buy Treasury bonds in a bid to drive down interest rates on mortgages, corporate loans and other debt. The hope is that cheaper credit will persuade Americans to increase spending, which would help the economy grow and lead companies to hire more workers.

The Fed's survey, known as the Beige Book, will figure into Fed policymakers' discussions at the November meeting about how the economy is faring.

The region-by-region survey is based on information collected from the Fed's 12 regional banks on or before Oct. 8. It provides a more intimate look at the overall economy than broad statistics.

"The overall read wasn't as depressing as it could have been," said Jennifer Lee, economist at BMO Capital Markets.

The economic picture hasn't changed much from early September, when the Fed's previous survey noted that seven regions saw modest improvement in business activity. What is different is which regions are growing, and which are struggling.

For instance, New York and Chicago reported a pickup in economic activity after having slower growth in the previous cycle. Conversely, the Dallas region was more subdued this time around after showing modest expansion the past report.

Either way, the economy has slowed from just a few months ago. In June, all 12 Fed regions reported their economies were growing. It was the first time that happened since the start of the recession in late 2007. That's a major reason the Fed is ready to launch a new round of stimulus next month.

by Jeannine Aversa Associated Press Oct. 21, 2010 12:00 AM



U.S. economic growth uneven, Fed survey says