WASHINGTON (10/17/13)--National economic activity continued to expand at a "modest to moderate pace" during September through early October, according to the Federal Reserve's "Beige Book" for October, released Wednesday.
Eight of the 12 Federal Reserve Districts reported similar growth rates in economic activity similar to the previous reporting period. However growth slowed in four districts--Philadelphia, Richmond, Chicago and Kansas City, said the report, prepared by the Federal Reserve Bank of Chicago.
The report is being scrutinized more closely because the partial government shutdown has stopped a number of economic reports on activity in September (USA TODAY Oct. 16).
"Contacts across districts remained cautiously optimistic in their outlook for future economic activity, although many also noted an increase in uncertainty due largely to the federal government shutdown and debt ceiling debate," said the report.
It noted consumer spending continued to increase, with travel and tourism sector activity expanding in most districts. Business spending and payrolls grew in many districts. Demand for nonfinancial services rose, and manufacturing activity expanded modestly.
Residential construction continued to increase at a moderate pace, said the Fed report. Nonresidential construction expanded at a slower rate. Job growth remained modest in September but several districts indicated some uncertainty related to the government debt ceiling battles and the partial implementation of the new healthcare law.
In the banking and finance areas, the book said, "financial conditions were little changed on balance from the prior reporting period. Overall loan growth remained modest in most districts." The report noted that "consumer loan demand weakened slightly" while mortgage lending was "mixed."
"Several districts noted a decrease in mortgage lending, citing higher mortgage rates and reduced refinancing activity. However, mortgage originations continued to rise in Philadelphia, Richmond and Dallas, and rising home prices led to an increase in home equity lending in Philadelphia, Chicago and San Francisco," said the "Beige Book."
Auto lending rose in Chicago, Cleveland and Atlanta while credit card volumes decreased slightly in Philadelphia.
Several districts noted a pickup in business loan demand, in both commercial and industrial and commercial real estate lending. Philadelphia, Cleveland, Richmond, Chicago and Dallas districts reported "intense competition on pricing and terms for commercial and industrial loans. "Contacts in Philadelphia and Chicago "expressed concern about an easing of credit standards on these loans. Overall, however, lending standards were largely unchanged and credit quality continued to improve modestly," said the report.
To access the full report, use the link.