WASHINGTON – Strong auto sales, hiring gains and a continued housing recovery helped the U.S. economy grow throughout the country in January and February, according to a survey released Wednesday by the Federal Reserve.
The Fed says 10 of its 12 banking districts reported moderate or modest growth, while Boston and Chicago districts reported slow growth.
Consumer spending increased in most regions, although growth slowed in many districts and much of the increases were driven by auto sales. Many districts said that consumers pulled back slightly on spending outside of autos after seeing taxes rise and gas prices increase. Some also expressed concerns about federal spending cuts that started on March 1.
Housing markets showed more strength in nearly all parts of the country, while manufacturing showed modest improvements in most regions. And most districts reported some improvement in individual jobs markets.
The report, called the Beige Book, provides anecdotal information on economic conditions through February 22. The information will be used as the basis for the Fed’s policy discussion at the March 19-20 meeting. Many economists believe Fed officials will take no new steps when they meet.
In January, the Fed stood behind aggressive steps it launched in December to try to reduce unemployment. It repeated that it would keep its key short-term interest rate at a record low at least until unemployment falls below 6.5 per cent. And the Fed said it would keep buying Treasurys and mortgage bonds to help lower borrowing costs and encourage spending.
The unemployment rate was 7.9 per cent in January when the Fed last met.
The economy has shown improvement since then, even as Americans paid higher taxes and automatic government spending cuts loomed. On Jan. 1, nearly all Americans who draw a paycheque began paying higher Social Security taxes and income taxes rose for the highest earning workers.
The tax increases and broader budget debate in Washington haven’t slowed financial markets.
The Dow Jones industrial average closed Tuesday at a record high and kept rising Wednesday. The index of 30 big corporations has more than doubled since hitting a low during the financial crisis in March 2009.
Consumer confidence rose in February from January, according to surveys by both the Conference Board and the University of Michigan. Factories and service companies both grew at the fastest pace in at least a year, according to surveys issued Friday and Tuesday by the Institute for Supply Management.
And payroll processor ADP said Wednesday that U.S. businesses added 198,000 jobs in February. The private survey also revised January’s hiring figures to show companies added 215,000 jobs that month, 23,000 more than what had initially been reported.
The figure suggests that the government’s February jobs report, to be issued Friday, may come in above economists’ forecasts. Analysts expect it will show the economy added 152,000 jobs and the unemployment rate dipped to 7.8 per cent from 7.9 per cent in January.