WASHINGTON — Economic activity expanded at a "measured pace" in recent weeks, though the effects of Hurricane Sandy and the looming fiscal cliff created some disruption and uncertainty, according to the Beige Book, released by the Federal Reserve Wednesday.
Of the twelve Federal Reserve districts, Cleveland, Richmond, Atlanta, Chicago, Kansas City, Dallas, and San Francisco all reported "modest" economic growth, while St. Louis and Minneapolis "indicated a somewhat stronger increase in activity." Boston reported slower growth, while New York and Philadelphia both reported economic weakness either directly attributed to or exacerbated by the hurricane.
Consumer spending was mostly stronger, the districts reported, while manufacturing was mostly depressed.
"Seven of the twelve Districts reported either slowing or outright contraction in manufacturing, and two others gave mixed reports," the Beige Book states.
Consumer lending was buoyed by increased demand for home mortgage loans and auto loans, and credit quality was generally higher, the Fed reported. Small business loan demand was generally weaker, however.
Contacts in several districts reported "concern and uncertainty" about the fiscal cliff, a combination of tax hikes and spending cuts set to kick in next year if federal lawmakers don't find a legislative compromise to avoid it.
"Because of the so-called fiscal cliff, there is some uncertainty about what to expect in terms of tax policy; this is viewed as particularly affecting planning by small businesses," the Boston district reported.
"Many of our contacts are expecting a slight weakening in business activity during the next few months due to seasonal factors and uncertainty surrounding the outcome of the fiscal cliff," the Cleveland district said.
