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Fed: Economy Still Expanding

The U.S. economy is still expanding, although at a slower pace, the Federal Reserve said Wednesday in its periodic Beige Book report on current economic conditions.

The report confirms recent data that show a growing, but not booming, economy. The report, prepared by staff economists at the Federal Reserve Bank of Dallas, does not give any rationale for a rate cut by the Federal Open Market Committee at the Dec. 22 meeting. However, conclusions in the Beige Book are not official Fed policy.

"All 12 district economies continued to expand in November, despite contraction in export industries," the Beige Book said. "Consumer spending was up, but several districts said sales were weaker than expected."

The Fed said wage pressures had "subsided somewhat," although "labor markets remained tight in nearly all districts." Inflation remains nearly invisible: "generally, prices of goods were reported to be steady or falling in nearly all districts."

The Fed said the rate of expansion was slowing in the Atlanta, Boston, Dallas, Kansas City and St. Louis districts and was accelerating in the New York district. Elsewhere, the rate of growth was steady.

The overall picture of the economy was mixed. Consumer spending, construction and loan demand were high. Bankers had tightened their lending standards.

Manufacturing "generally softened" in many industries, including apparel, chemicals, lumber, paper, some high-tech and steel. On the other hand, autos, furniture, construction materials and some high-tech were strong.

"Financial stress in the farm sector" was reported by the five districts in the Midwest, Southwest and South that represent the bulk of U.S. agriculture. The energy sector declined.

Written By Rex Nutting

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