News Column

Report Shows Modest Economic Growth

August 30, 2012

The Associated Press


The Federal Reserve says the U.S. economy grew moderately in July and early August, and that hiring was more robust than in the previous six-week period.

A Fed report on business conditions released Wednesday said nine of its 12 districts experienced growth that was "modest" or "moderate." That's roughly in line with the conditions described in the previous report.

Strength in auto sales, tourism and home sales in July and early August offset weakness in manufacturing.

The report comes two days before Fed Chairman Ben Bernanke speaks to an annual conference of economists in Jackson Hole, Wyo.

Financial markets will be listening for any signals about whether the Fed might take action to stimulate the economy at its next policy meeting on Sept. 12-13.

The economy is still struggling to gain traction more than three years after the end of the Great Recession in June 2009. The Fed report said that six of its districts reported weaker demand in manufacturing. And it highlighted concerns about a severe drought affecting cotton, soybean and corn crops in its Chicago, St. Louis and Kansas City districts.

The report, known as the beige book, is released eight times a year and is based on information the Fed's 12 regional banks gather from business contacts around the country.

Other economic data released Wednesday also pointed to a slowly improving economy.

Americans signed the most contracts to buy homes in July than at any other point in the last two years, according to the National Association of Realtors.

Its index of sales agreements for previously occupied homes jumped 2.4% in July to 101.7. That's the highest reading since April 2010, the last month that buyers could qualify for a federal home-buying tax credit. Contract signings typically indicate where housing sales are headed one to two months out.

Also, the Commerce Department reported the economy grew at a 1.7% annual rate in the second quarter instead of the 1.5% previously estimated.

Slightly stronger consumer spending and greater exports were the main reasons. Still, 1.7% is slow, and that's worse than 2% annual rate in the January-March quarter and the 4.1% rate in 2011's fourth quarter.

Economists expect only modest improvement in the second half of the year. Most believe the economy will keep growing, but at a subpar rate of around 2%.

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Source: Copyright USA TODAY 2012

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