Consumer Spending (Photo credit: 401(K) 2013)
The nation’s economy expanded in all 12 Federal Reserve districts in late January and February, though a recent payroll tax increase, the new health care law and the budget standoff in Washington tempered consumer spending and hiring, the Fed said Wednesday.
Overall, the economy has been resilient despite the tax increase and the prospect of $85 billion in federal spending cuts that began to take effect March 1. The economy grew moderately in five districts, modestly in five others and “slowly” in the Boston and Chicago areas, the Fed said in its “beige book” report.
The housing rebound gained steam, and manufacturing and consumer spending grew moderately, while the labor market generally improved, and bankers opened the lending spigots a bit more.
Consumer spending picked up in most areas. Retail sales grew in the Philadelphia and Richmond, Va., areas in particular, but bad weather crimped sales in the Boston, New York and Minneapolis regions. Sales slowed overall in Kansas City.
The end of the payroll tax holiday in January, businesses’ worries about expenses from the health care law, the budget battle and rising gasoline prices all hampered retail activity, the Fed said.
The auto market, however, remains a bright spot, with sales solid or strongly increasing in most districts. Auto dealers in the Philadelphia-New Jersey area said lingering effects from Superstorm Sandy, which damaged cars, continue to bolster sales.