Latest Federal Reserve Beige book shows mixed U.S. economic activity

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The latest Federal Reserve Beige book report on the U.S. economy was released yesterday with the New York area hit by Hurricane Sandy but growth in most other areas growing at a “measured pace” though weakness in manufacturing was highlighted as a concern. Seven of the 12 Fed regions reported weak factory activity and two more said that conditions were mixed. Five of the Fed districts blamed the fiscal cliff for the slowdown.

The latest Beige book supports the view that the Federal Reserve will continue its third round of $40 billion a month of quantitative easing given there are few signs of a strengthening of the U.S. economy. 

The report says

Economic activity expanded at a measured pace in recent weeks, according to reports from contacts in the twelve Federal Reserve Districts. Cleveland, Richmond, Atlanta, Chicago, Kansas City, Dallas, and San Francisco grew at a modest pace, while St. Louis and Minneapolis indicated a somewhat stronger increase in activity. In contrast, Boston reported a slower rate of growth. Weaker conditions in New York were attributed to widespread disruptions at the end of October and into November caused by Hurricane Sandy. Philadelphia reported general weakness that was exacerbated by the hurricane. However, in the Boston and Richmond Districts, the storm’s effects were mostly limited. Contacts in a number of Districts expressed concern and uncertainty about the federal budget, especially the fiscal cliff. “

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