WASHINGTON – Americans spending more on cars and housing helped the economy maintain a "modest to moderate" pace of expansion from early July through late August, even as borrowing costs increased, the Federal Reserve said Wednesday.
Consumers spent more on travel and tourism while manufacturing expanded "modestly," the Fed said Wednesday in its Beige Book business survey, which is based on anecdotal reports from its 12 regional banks. Hiring "held steady or increased modestly."
The Federal Open Market Committee is debating whether growth is sufficient to fuel steady improvement in the job market and warrant tapering the Fed's $85 billion in monthly bond buying. Speculation the FOMC will dial down purchases at its Sept. 17-18 meeting has roiled financial markets, pushing up U.S. bond yields and contributing to the worst rout in the currencies of developing nations in five years.
The effects of higher interest rates was reflected in Wednesday's report, with conditions in housing and bank lending slowing from the previous Beige Book of July 17.
The world's largest economy has weathered the impact from federal budget cuts and higher taxes, with gross domestic product growth accelerating to a 2.5 percent annualized rate in the second quarter from 1.1 percent during the first three months of the year.
"The economy is growing at a steady pace," said Thomas Costerg, an economist with Standard Chartered in New York. "It's not accelerating, but it's still healthy."
Payrolls rose by 180,000 following a 162,000 gain the prior month, according to the median forecast of 71 economists surveyed by Bloomberg before the Sept. 6 release of Labor Department data.
Faster hiring and income gains would underpin consumer spending, which accounts for about 70 percent of the economy.
