WASHINGTON - All twelve Federal Reserve Districts reported at least “modest” economic growth in April and May, the Federal Reserve Board said today in its Beige Book of economic activity.
Consumer spending increased, especially in tourism, and business spending rose, but at a slower pace.
April and May retail sales increased, but mostly for necessities as opposed to discretionary, “big-ticket” items, districts said. Retail sales figures for May will be released on Friday.
The report showed improvement in tourism. Districts reported air travel and convention activity increased.
However, the Atlanta District said that the Gulf of Mexico oil spill and floods in Tennessee during May resulted in some vacation cancellations.
“The potential exists for a much greater impact, although contacts are quite uncertain as to the ultimate effects,” the report said.
Business spending continued to increase, but some districts said inventory spending was “leveling off.” Tight credit availability has limited expenditures, some businesses reported. Auto production has not kept pace with demand, and dealers’ stocks are already lean, districts said.
Residential activity strengthened with the help of the April 30 deadline for the homebuyer tax credit. But new development was restrained by tight credit conditions, a high level of home inventories and the “shadow inventory, or foreclosed properties that are held on banks’ balance sheets,” districts said.
Many districts said temporary hiring continued to increase, and that employment gains are strongest in the manufacturing sector. Wage pressures were limited, districts said.
The Beige Book report was based on information collected on or before May 28. The previous report was released on April 14.
