Newspaper article THE JOURNAL RECORD

Fed Reprots Few Signs of Worrisome Inflation

Newspaper article THE JOURNAL RECORD

Fed Reprots Few Signs of Worrisome Inflation

Article excerpt

WASHINGTON _ The pace of economic growth in the spring appears to be moderate with few signs of worrisome inflation, the Federal Reserve says.

The central bank, in its periodic survey of regional business activity, reported Wednesday that the economy generally is healthy, although not as robust as it had been.

"In some areas growth has moderated recently," the survey said. "Contacts in a number of districts report slower-than-expected growth in May retail sales but some signs of increasing sales in early June."

The generally upbeat report coincided with Federal Reserve Chairman Alan Greenspan's testimony on Capitol Hill, where he offered his own optimistic view of the economy in hopes of calming nervous financial markets.

The Fed's survey of economic conditions, based on reports from its 12 regional banks, suggested there is little cause for worry over inflation.

While there are signs labor markets are tightening and some commodity prices are up, the report said wage pressures are mild and competition is holding down price increases for consumers.

The survey, concluded before June 14, is in line with most recent government reports that show economic growth slowing from the booming pace that closed out last year.

"Manufacturing continued to show strength in most districts," the Fed said. "Defense-related industries, however, continue to be the weak spots."

There may also be cause for optimism in California, a state that has been mired in recession and high unemployment while the rest of the nation has been enjoying recovery.

The aerospace industry continues to suffer, the report said. But other manufacturing activity and building construction are beginning to pick up, along with sales of furniture and appliances to replace those lost in January's Los Angelesarea earthquake.

After the economy surged at a sizzling pace in the closing months of 1993, the Federal Reserve boosted short-term interest rates four times this year to cool things off and thwart inflation. …

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