The US economy refuses to deliver a longed-for jobs boom even as the expansion moves into early 2004, the Federal Reserve's Beige Book survey showed this evening.
'Economic activity continued to expand in January and February,' said the closely watched overview, drawn from reports by the central bank's 12 districts and released eight times a year.
Growth was 'moderate,' 'firm,' or 'sound' in nine of the districts, and appeared to be accelerating in New York, Richmond and Dallas, the central bank report said. But it added that 'employment has been growing slowly in most Federal Reserve districts'.
Wages and salaries had increased only slightly. Employers reported 'substantial increases' in health care costs for their workers, however, the central bank said.
Outside the labour market however, the economy picked up, the Federal Reserve report revealed. Consumer spending rose, the Beige Book said.
Merchandise sales gained in most areas of the country. But car sales decelerated, partly because freezing or snowy weather swept people off the car lots.
Tourism brightened compared to last winter, with bountiful snowfalls in ski resorts. And manufacturing output expanded in all areas except Cleveland, where production was steady.
Demand for housing, powered by super-low mortgage rates, was 'strong,' the bank said. But commercial real estate markets were 'soft.'
The Beige Book report will be on the table when Federal Reserve chairman Alan Greenspan meets with his fellow policymakers on March 16 to ponder the direction of the key federal funds target rate, now lying at a 1958 low of 1%.
No change in rates is expected until jobs expand fast and years of economic slack are taken up. Many economists say that means super-low interest rates for the rest of 2004.
