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Fed says 12 regions grew modestly this summer

Fed says 12 regions grew modestly this summer

September 7th, 2011 in News

WASHINGTON (AP) - Despite the turmoil that shook the financial markets last month, the Federal Reserve says its 12 bank regions grew this summer because consumers spent more in many parts of the country.

The Fed said five of its regions reported modest or slight growth in late July and August. Those regions included St. Louis, Minneapolis, Kansas City, Dallas and San Francisco.

The seven other regions described growth as subdued, slow or sluggish.

The survey, which was released Wednesday, is known as the Beige Book and offers mostly anecdotal information about economic conditions around the country. It's findings were a slight improvement from the previous survey, which said growth had slowed in eight of the 12 regions in June and early July.

Consumer spending increased in most regions from the previous survey. But the gains were mostly because of stronger auto sales. Demand for products outside of autos was flat or fell in several regions during late July and August.

Several districts said the volatile stock market and economic uncertainty led many businesses to lower growth expectations for the near future. The Dow Jones industrial average lost 2,000 points, or roughly 16 percent, from July 22 through Aug. 10.

"Although far from upbeat, the overall tone from the anecdotal evidence ... wasn't all doom and gloom," said Jennifer Lee, senior economist at BMO Capital Markets.

The regional outlook will help shape the discussion at the central bank's next meeting on Sept. 20-21.

The economy barely grew in the first half of the year, and the government said last week that employers stopped adding jobs in August.

Consumers and businesses are feeling less confident after a turbulent summer. Lawmakers fought over raising the federal borrowing limit, Standard & Poor's downgraded long-term U.S. debt, and stocks have fluctuated wildly after plunging in late-July and early August.