Fed survey: Economy is growing, but slowly

WASHINGTON - The U.S. economy registered modest growth in the early summer even as consumers and some businesses were buffeted by high gasoline prices and the sour housing market, a government report released yesterday showed.

The Federal Reserve's region-by-region survey indicated that the economy clearly has emerged from a rut at the beginning of the year and is now growing, albeit slowly.

Consumer prices continued to increase "at a moderate rate," the Fed report for June and early July said. "Almost every region said that oil and gasoline prices were . . . rising, high or an issue," it noted. Gasoline prices had climbed past $3 a gallon nationwide.

The periodic report - known as the Beige Book, for the color of its cover - is prepared by the 12 regional Federal Reserve Banks.

The Philadelphia Federal Reserve Bank said economic conditions in eastern Pennsylvania, southern New Jersey and Delaware had improved. In manufacturing, new orders and shipments rose in the June-July period, while sales of upper-end retail goods and autos were up.

"It looks pretty good," said Steven Cochrane, senior managing director at Moody's Economy.com in West Chester, Pa. "It's the only Fed district that actually said economic conditions are improving."

The Philadelphia region has not been hit as hard in the housing slump because the area never had the stratospheric rise in home prices as places such as Boston and parts of Florida, Cochrane said.

Fed Chairman Ben S. Bernanke told Congress last week that he expected the economy to grow gradually through this year and to strengthen a bit next year. He said inflation remained the chief concern.

Consumer spending - a major shaper of overall economic activity - continued to grow in the early summer.

However, a number of Fed regions reported that high gasoline prices restrained purchases. Also, five of the Fed's 12 regions said retail sales of housing-related items, such as furniture and home-repair materials, were weak or declining. Tourism reports, meanwhile, were mostly positive.

Highlights from yesterday's Federal Reserve report on the region's economy in June and early July.

Overall, economic conditions improved in early summer. But inflationary pressures remained a concern.

The increase in manufacturing shipments was the largest in six months.

Retailers said sales of luxury goods experienced double-digit gains, but sales of moderate- to low-price products were basically flat.

Personal lending remained flat, as did demand for residential mortgages. Commercial and industrial lending was healthy.

Service companies expect business to increase in the coming months.

Some agricultural prices are rising.

EndText