US growth slows in areas; debt impasse fears rise: Fed

Growth in some US regions has slowed in recent weeks and concerns about the economic impact of the Washington budget drama have risen, a Federal Reserve report said.
Overall, contacts remained cautiously optimistic about the economic outlook, according to the Fed's Beige Book regional survey, here yesterday.
It characterised growth in the world's largest economy as "modest to moderate" for the fourth time in a row.
However, it said, many respondents "also noted an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate."
The new report included information collected through October 7, the first week of the federal government shutdown over a budget deadlock between the White House and Congress.

Of the Fed's 12 districts, "growth slowed some" in four: Philadelphia, Chicago, Kansas City and Richmond, which includes the Washington DC area, which felt the brunt of temporary layoffs of federal workers due to the budget impasse.

Most districts reported rises in consumer spending and improved travel and tourism activity. Auto sales were still "strong" -- and in the New York region even "increasingly robust."
The service sector, the bulk of the US economy, saw rising demand.
Manufacturing activity "expanded modestly" and while there was little immediate disruption from the federal government shutdown, "contacts were worried about the potential impact if the closing became prolonged."

Home construction, a rare bright spot in the economic recovery, continued to increase "at a moderate rate."
Jobs growth, closely watched by the Fed under its dual mandate of maximum employment and price stability, "remained modest in September," the report said.
That information helped to fill the void of official data created by the government shutdown. The Labour Department has postponed the September jobs report that had been due for release on October 4.
Several districts reported that contacts were hesitant to expand payrolls, citing uncertainty about the US fiscal policy and the implementation of the Affordable Care Act, President Barack Obama's landmark health-care initiative.

"Price and wage pressures were again limited," the report said, reflecting the weak labour market. But there was still high demand for skilled labour, including in technology, healthcare, engineering and financial services.
Financial conditions were little changed from the September Beige Book, with modest overall loan growth.
The new report, a collection of anecdotal information across the country, will provide input to the October 29-30 monetary policy meeting of the Federal Open Market Committee.