Fed survey: Economy falters in several US regions
Wednesday, June 8, 2011
WASHINGTON (AP) — For the first time this year, the economy has slowed in several U.S. regions, burdened by high gas prices that have weakened consumer spending and crises in Japan that reduced manufacturing output.
All 12 of the Federal Reserve’s bank regions grew this spring. But four of the regions suffered slower growth in April and May from earlier this year, according to a Fed survey released Wednesday.
It was the weakest survey since fall, when the Fed said two regions failed to grow at all. And it confirmed a slew of data that portray a national economy whose growth has faltered. Hiring has slowed, orders to factories have declined and home prices have fallen.
Fed banks in New York, Philadelphia, Atlanta and Chicago said growth weakened in those regions. By contrast, the Fed regions in Boston, Cleveland, Richmond, St. Louis, Minneapolis, Kansas City and San Francisco said growth there remained steady.
The Dallas region was the only one to report accelerating growth. That was mostly because of higher oil prices, which benefited the region’s energy industry.
The report, known as the “Beige Book,” is based on anecdotal information gathered by officials at the Fed regional banks. It is released eight times a year and provides a more in-the-trenches review of the economy than government statistics do. Wednesday’s report covered the roughly seven weeks between April 5 and May 27.
Manufacturing output grew more slowly in five districts. Japan’s March 11 earthquake and tsunami have disrupted auto production and sales. Many factories in the U.S. owned by Japanese automakers, including Toyota and Honda, rely on Japanese suppliers for electronic components and other parts. They’ve had to cut output because of shortages of those supplies.
Such production cuts, in turn, have reduced the flow of cars to dealers, the Fed report said. Auto sales in the New York, Philadelphia and Cleveland districts have declined.
Looking ahead, several districts are less optimistic about manufacturing growth. Boston said some of its manufacturers expect sales to slow in coming months. The Cleveland Fed said some companies are delaying large-scale projects.
But the Chicago and Atlanta banks said factories in their districts expect to boost output in the second half of this year, partly because of a likely rebound in auto production.
Retail sales declined in the Richmond and Boston districts, the report said, and grew more slowly in New York, Atlanta, Chicago, St. Louis and San Francisco. High gas prices were the main reason.
The New York Fed said a major retail chain and a large mall in upstate New York reported slower sales in May, after robust sales in April. Gas prices nationwide averaged nearly $4 a gallon in early May, before falling back.
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