US economy mostly growing, some areas flat

The US economy grew in most parts of the country, while the New York and Kansas City regions reported essentially flat growth, a closely watched Federal Reserve report showed Wednesday.
The Beige Book report said that nine of the Fed's 12 districts had reported increased economic activity that was either "moderate" or "modest" and the outlook for future growth from persons surveyed was "mostly positive" in six districts.

The latest Beige Book, tracking recent economic conditions through January 4, comes two weeks before the Federal Reserve holds its first monetary policy of 2016, after making a landmark decision last month to raise interest rates for the first time in more than nine years.

The collection of anecdotal information helps to inform policy decisions by the Federal Open Market Committee (FOMC).

The prior Beige Book, released on December 2, had reported an increase in consumer spending in most districts and "robust" automobile sales.

The new report gave a lackluster picture on consumer spending, which drives about two thirds of the economy, saying growth "ranged from slight to moderate" in most districts, while auto sales were "somewhat mixed."

Though labor markets continued to improve, with some signs of tightening, overall the districts reported little change in wage and price pressures, with "wage increases running from flat to moderate, while price increases tended to be minimal."

The FOMC is widely expected to leave the benchmark federal funds rate range between 0.25-0.50 percent at the January 26-27 meeting, after raising it on December 16 from near zero, where it had been pegged for seven years to help support the recovery from the Great Recession.

Fed officials on average expect the benchmark federal funds rate to reach 1.4 percent by the end of 2016. That outlook implies four quarter-point increases this year.

But bond market prices suggest investors expect only two increases, and the recent China-driven economic turmoil has pushed some investors to expect just one hike.