The weak US economy is improving modestly with little upward pressure on wages and finished goods despite commodity price gains, the Federal Reserve said last evening in a report that is unlikely to see the central banko move from interest rates from their current ultra-low positions.
Eight of the Fed's 12 districts reported some pickup in economic activity since an October 21st report. The remaining four - Philadelphia, Cleveland, Richmond and Atlanta - reported conditions little changed or mixed, the Fed said in its Beige Book anecdotal report on economic conditions.
Commercial property and construction ran counter to the trend of moderate pickup, however. Business contacts told the Fed those areas are very weak and in many cases deteriorating.
Battered jobs markets remained weak but were stabilising and showing scattered signs of improvement, the Fed said. The report pointed to little reason to worry about inflation. Some districts reported upward pressure on commodity prices, but little or no indication of upward pressure on wages or any "significant" upward pressure on finished goods prices.
The Fed held benchmark interest rates at close to zero at its November policy meeting and promised to keep rates exceptionally low for a long time to support a weak recovery likely to be held back by persistently high unemployment, which hit a 26-year plateau of 10.2 per cent in October.
The US economy has shed 7.3 million jobs since the recession began in December 2007, and consumers and businesses have pulled back spending sharply. The Fed said in November that its low-rate policy is warranted by the weak job market, low inflation, and low inflation expectations.
November US payroll and unemployment data are due to be released tomorrow morning, and analysts predict a sharp drop in jobs lost, to 130,000 after 190,000 in October.
Consumer spending had picked up modestly for both general merchandise and vehicle sales, including a rebound in vehicle sales after a dip following the end of the government-supported "cash-for-clunkers" buying incentive program, the Fed said.
Reuters