WASHINGTON (AFP) — The US economy is sputtering amid weak housing, difficult credit and "retrenchment" in consumer spending, while inflation pressures are high, the Federal Reserve said in its Beige Book report Wednesday.
The report, to be used by its policymakers for their September 16 meeting on interest rates, indicated little improvement from the sluggish pace of activity since July.
Data from the 12 regional Fed banks "indicate that the pace of economic activity has been slow in most districts," the Beige Book said.
"Many described business conditions as 'weak,' 'soft,' or 'subdued,'" the report said.
Some regions showed "weakening," with others seeing modest improvement and others "stabilization," the report said.
The report highlighted troubles facing US consumers, affecting spending that accounts for some two-thirds of economic activity.
"Consumer spending was reported to be slow in most districts, with purchasing concentrated on necessary items and retrenchment in discretionary spending," the report said.
Auto sales were "falling or steady at low levels" while tourism activity was "mixed," with some support from international travelers in a few areas.
On the inflation front, "almost all districts continued to report price pressures from elevated costs of energy, food and other commodities, although some noted that there have been declines or slower increases for several industrial commodities or energy products," the Beige Book said.
Some businesses have been able to increase prices to respond to higher input prices while wage pressures were "moderate" in most areas.
The manufacturing sector was "weak or declining" in most regions with some help from the export sector, according to the report.
In banking, loan demand was "steady or slowing" with softer demand for mortgages. All the districts reported "tightening" loan standards, which can crimp borrowing and economic activity.
The latest official data showed the US economy expanded at a healthy 3.3 percent annual pace in the second quarter, although many analysts say the figure was skewed by a jump in exports and one-time tax rebates from an economic stimulus plan.
Some forecasters say the world's biggest economy remains on the brink of recession and could see more turmoil ahead if the housing market fails to stabilize.
The Fed has held its base lending rate at a low 2.0 percent since April, which should help stimulate flagging growth. But Fed officials have acknowledged that consumers and business may still face tight credit or high borrowing costs because of problems in the banking sector.
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