The beige book offers anecdotal evidence to help policymakers assess an economy that added 120,000 jobs in March, the fewest since October. Fed Chairman Ben S. Bernanke last month said that further “significant” improvements in the unemployment rate would probably require a more rapid expansion.
The beige book’s depiction of hiring may “discredit” the weaker jobs report from March, Michael Materasso, co-chairman of the fixed-income policy committee at Franklin Templeton Investments, told Bloomberg Television’s “Bottom Line.” “The outlook for jobs seemed to be much more of what we were seeing in the prior months,” he said.
Higher gasoline prices may weigh on the economy, the report said. “While the near-term outlook for household spending was encouraging, contacts in several districts expressed concerns that rising gas prices could limit discretionary spending in the months to come,” the Fed wrote.
Inflation was “modest,” the report said, and “upward pressure on wages was constrained.”
The U.S. economy, which grew at a 3 percent annual rate in the final three months of last year, will probably expand 2.2 percent in 2012 and 2.4 percent in 2013, according to a Bloomberg News survey of 72 economists.
Atlanta Fed President Dennis Lockhart said Wednesday that while the March jobs report was disappointing, he is still “not convinced that another round” of asset purchases by the central bank “would achieve a great deal.” Such policy should be held in reserve for a “fairly negative change of direction of the economy,” he said.
Wednesday’s report reflects information collected on or before April 2 and summarized by the Cleveland Fed. In the previous beige book, released Feb. 29, the Fed said that “overall economic activity continued to increase at a modest to moderate pace in January and early February.” It said the districts of Cleveland, Chicago, Kansas City, Dallas and San Francisco reported moderate growth in February.
In this month’s survey, a “moderate pace” of growth was ascribed to Boston, Atlanta, Chicago, Dallas and San Francisco. Cleveland and St. Louis cited “modest growth.” New York said growth “picked up somewhat,” while Philadelphia and Richmond noted “improving business conditions.”
The economy grew at a “solid pace” in the Minneapolis Fed district, and Kansas City cited “a faster pace.” Manufacturers mentioned gains in automotive and high-technology industries, the report said. The firms “expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices.”
“Overall price inflation was modest,” the Fed said. “However, contacts in many districts commented on rising transportation costs due to higher fuel prices.”
Retail spending reports were “positive,” and professional business services “showed modest to strong growth,” according to the report.
U.S. stocks rebounded from five days of losses Wednesday after Alcoa reported an unexpected first-quarter profit. The Dow Jones industrial average climbed as much as 129 points in early trading before settling at 12,805.39, up 89.46 points. The Standard & Poor’s 500 rose 10.12 points to 1368.71 after losing 24 points the day before. The Nasdaq composite climbed 25.24 points to 3016.46 following a 56-point loss Tuesday.
— Bloomberg News