Economic activity has been slow across most of the United States in recent weeks, but there has been some relief from high commodity and energy prices, the Federal Reserve said on Wednesday.
"The pace of economic activity has been slow in most districts," the Fed said in its Beige Book report on the state of the economy through August 25.
The Fed said almost parts of the country were feeling price pressures from the high costs of energy, food and commodities. However, some areas noted declines or slower price rises for several industrial commodities and energy prices, the U.S. central bank said.
The Fed's interest-rate setting panel is set to meet to September 16 and is expected to hold benchmark interest rates steady at 2 percent, where they have been since April. The Fed brought rates down 3.25 percentage points since September 2007 to buffer the economy from financial market turmoil and the housing market collapse.
However, even as the central bank sought to prevent economic activity from grinding to a halt, soaring oil prices and strong global demand for commodities raised inflation fears. Several Fed officials have urged the central bank not to delay rate increases to keep price pressures in check.
In the Beige Book, the Fed said businesses in a number of areas increased selling prices due to higher input costs. At the same time, wage pressures were moderate in most districts amid a general pullback in hiring.
Exports had boosted factory activity in a number of districts, the Fed said. However, some manufacturers were seeing a recent slowing in growth from exports.
The survey, based on reports from the Fed's 12 regions, said business conditions were "weak," soft," or "subdued."
The U.S. economy has been pushed to the brink of recession by a severe housing downturn and tight credit. Government stimulus checks to taxpayers have provided some lift in recent months, and the economy expanded by a steady 3.3 percent annualized rate in the April-June quarter.
However, many analysts expect growth to slow in the latter half of the year as spending from the stimulus dries up and as a stronger dollar and weaker global demand slow exports.
The Fed's survey said consumer spending was soft in most areas, with consumers sticking to necessities and bypassing discretionary items.
Residential real estate weakened or stayed soft everywhere except the Kansas City area, where there was a modest improvement.
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