Fed survey shows economy ended 2011 with strength

Jan 11, 2012, 10:15 PM

AP Economics Writer

WASHINGTON (AP) – The final weeks of 2011 were among the economy’s strongest as Americans shopped and traveled more, ending the year with a shot of optimism for 2012.

That’s the bright picture the Federal Reserve sketched in a survey released Wednesday. It said all but one of its 12 banking districts experienced some growth from late November through the end of the year.

Some sectors of the economy, notably housing, remain weak, the Fed said. But consumers spent more freely. Factories made more goods. Americans stepped up travel. And the auto industry enjoyed its best stretch of the year.

Economists noted greater confidence in the tone of the report. For example, the central bank described auto manufacturing as “vibrant” in several districts. Consumer spending was deemed “robust” in the Dallas region.

“It has been quite a while since we have seen the Fed use words like vibrant and robust to describe any part of the economy,” said Brian Bethune, an economics professor at Amherst College. “I think one of the things driving the stronger language is that things are better than the Fed had been expecting.”

The one district that didn’t experience growth was Richmond, Va., although even there, the Fed said economic activity either “flattened or improved slightly.”

The report comes just six months after the economy nearly stalled under the weight of high food and gas prices and supply disruptions from Japan that slowed U.S. manufacturing.

The economy and the job market have both improved since then. And December may end up being the strongest month of 2011. Employers added 200,000 jobs. And the unemployment rate fell to 8.5 percent _ the lowest rate in nearly three years.

“The Fed’s report Wednesday confirms what everyone else has been seeing in the economic data from retail sales to auto sales and manufacturing _ activity is improving,” said Jennifer Lee, senior economist at BMO Capital Markets.

Most of the Fed’s districts reported holiday sales increased over last year. In particular, New York and Dallas’ districts reported healthy gains. Boston, New York and Minneapolis reported exceptional growth in online sales.

Consumers are spending more on cars and travel, the survey noted. Auto sales in the Atlanta area were the best sales in more than two years. Boston, New York, Richmond and Atlanta experienced gains in tourism from a year ago. In Boston alone, businesses expect double-digit growth in hotel revenue in 2012.

U.S. manufacturing continued to lift the economy, particularly in industries that make heavy equipment and steel. That has helped boost energy, farming and auto manufacturing sectors, the report said.

The depressed housing market has hurt some manufacturers, and the Fed cited weakness among furniture manufacturers in the Richmond, St. Louis and San Francisco districts.

Inflation remained subdued, largely because high energy prices have eased. That may change in the new year. Oil has climbed above $100 a barrel again, and gas prices are creeping up.

The strength shown in the Fed survey reflected other positive economic reports.

Consumer confidence hit its highest point since the spring. U.S. automakers reported their two best months of sales for 2011 in November and December. And U.S. factories ended the year with their best month of growth since spring.

Most economists predict the economy grew at an annual rate of 3 percent in the final three months of last year. That would be an improvement from the summer, when the economy expanded just 1.8 percent, and much better than the 0.9 percent annual growth rate in the first half of 2011.

Still, the U.S. economic recovery remains vulnerable. Europe’s debt crisis could lower demand for U.S. exports. Consumers may pull back on spending, especially if their wages continue to stagnate.

And Congress could decide not to extend a Social Security tax cut or long-term unemployment benefits, leaving many households with less income. Both measures expire at the end of February.

The Fed has been studying the economy’s progress but announced no new actions to try to energize it after its Dec. 13 meeting. That was taken as a sign of confidence that the economy was in no immediate danger.

But in the minutes from the meeting released last week, the Fed said it will start this month announcing four times a year how long it plans to keep short-term interest rates at existing levels.

The change is intended to reassure consumers and investors that they will be able to borrow cheaply well into the future. And some economists said it could lead to further Fed action to try to invigorate the economy.

The Fed’s next meeting is set for Jan. 24-25.

The Beige Book is released eight times a year. The findings from each of the Fed’s regional bank districts are all anecdotal; there are no numbers.

The idea is to detect trends in consumer spending, manufacturing and real estate, among other areas. Consumer spending is particularly important because it accounts for about 70 percent of gross domestic product, the value of all goods and services produced in the United States.

(Copyright 2012 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)

United States News

Body bags lie at the scene where a tractor trailer with multiple dead bodies was discovered, Monday...
Associated Press

46 dead after trailer carrying migrants found in San Antonio

SAN ANTONIO (AP) — Forty-six people were found dead in and near a tractor-trailer and 16 others were taken to hospitals in a presumed migrant smuggling attempt into the United States, officials in San Antonio said. It’s among the deadliest tragedies to have claimed thousands of lives of people attempting to cross the U.S. border […]
21 hours ago
This image provided by the Horry County Sheriff's Office in Conway, S.C., shows Bhagavan "Doc" Antl...
Associated Press

‘Tiger King’ star Doc Antle set to be released on bond

Bond has been set for “Tiger King” star Bhagavan “Doc” Antle on charges he laundered more than half a million dollars, money federal prosecutors have said that he believed to be the proceeds of an operation to smuggle people across the Mexican border into the United States. A federal judge in Florence, South Carolina, on […]
21 hours ago
In this photo provided by Dax McDonald, an Amtrak passenger train lies on its side after derailing ...
Associated Press

3 killed, dozens hurt in Amtrak train crash in Missouri

MENDON, Mo. (AP) — An Amtrak passenger train traveling from Los Angeles to Chicago struck a dump truck Monday in a remote area of Missouri, killing three people and injuring dozens more as rail cars tumbled off the tracks and landed on their sides, officials said. Two of those killed were on the train and […]
21 hours ago
In this image from video released by the House Select Committee, John Eastman, a lawyer for former ...
Associated Press

Lawyer who advised Trump says federal agents seized phone

WASHINGTON (AP) — A conservative lawyer who aided former President Donald Trump’s efforts to undo the 2020 election results and who has been repeatedly referenced in House hearings on the Jan. 6, 2021 assault on the Capitol said in a court filing Monday that federal agents seized his cell phone last week. John Eastman said […]
21 hours ago
FILE - Police tape blocks the entrance to the Castro Muni Metro train station following a shooting ...
Associated Press

Attorney: Man involved in train killing shot in self-defense

SAN FRANCISCO (AP) — A man who shot and killed a passenger on a San Francisco subway commuter train will be charged with gun crimes but not homicide in what was “clearly” a case of self-defense after he was attacked with a knife, his attorney said Monday. Javon Green, 26, will face charges of having […]
21 hours ago
Associated Press

Mary Mara, TV actor for decades, dies in apparent drowning

CAPE VINCENT, N.Y. (AP) — Mary Mara, who appeared on television shows including “Ray Donovan,” “Dexter” and “ER” in an acting career that spanned more than 30 years, has died in what New York authorities said appeared to be a drowning accident. The New York State Police said Monday a woman identified as Mara, 61, […]
21 hours ago

Sponsored Articles

(Courtesy Condor)...
Condor Airlines

Condor Airlines shows passion for destinations from Sky Harbor with new-look aircraft

Condor Airlines brings passion to each flight and connects people to their dream destinations throughout the world.
...

Most plumbing problems can be fixed with regular maintenance

Instead of waiting for a problem to happen, experts suggest getting a head start on your plumbing maintenance.
...
CANVAS ANNUITY

Best retirement savings rates hit 4.30%

Maximize your retirement savings with guaranteed fixed rates up to 4.30%. Did you know there is a financial product that can give you great interest rates as you build your retirement savings and provide you with a paycheck for life once you retire? It might sound too good to be true but it is not; this product is called an annuity.
Fed survey shows economy ended 2011 with strength