US Federal Reserve fears financial recovery may be running out of steam
US economic activity rose only modestly in June and the first half of July, the Federal Reserve said in a report yesterday in another sign that the recovery may be running out of steam.
In its latest beige book report, the Fed said economic conditions continued to improve in most of its 12 regional districts, but the advances were modest, with retail sales posting only small gains and housing and construction remaining weak. Bank lending, meanwhile, was still tight.
The report underscored the Fed's view that the recovery, while still moving forward, was progressing at a slower pace than earlier in the year. Fed chairman Ben S Bernanke said in congressional testimony last week that the central bank expected "continued moderate growth" and noted that the economic outlook remained "unusually uncertain".
The US economy has been expanding at a moderate pace for most of the past year, gradually recovering from the deepest recession in many decades. However, economic data for June have pointed to a possible slowdown, especially in consumer spending and in an already weak housing sector.
The Fed reported improvements in service industries, an increase in tourism, an expansion of manufacturing and progress in labour markets.
The beige book is a summary of economic activity prepared for use at the US central bank's next policy-setting meeting on August 10.
Meanwhile, bank credit remained tight and some areas noted soft or lower levels in overall loan demand.
The report, published two weeks before the Federal Open Market Committee next meets, offers anecdotal evidence that will help central bankers weigh changes in an economy where confidence has slipped in recent months. The New York-based Conference Board said yesterday that its survey of consumer sentiment fell to the lowest level in five months.