Stronger housing markets helped boost economic growth at the end of the summer in nearly every region of the US, according to a Federal Reserve survey released last night.
The Fed said growth improved in 10 of its 12 regional banking districts from mid-August through September, while leveling off in one region and slowing in another.
Rising home sales helped lift home prices in most districts.
The report, known formally as the Beige Book, also cited an increase in car sales in most parts of the country.
But consumer spending was flat or up only slightly in most districts.
Manufacturing activity was mixed, with half of the districts reporting slight improvement since the previous Fed report. And hiring was unchanged in most districts.
Economists said the August report represents a subtle shift in the central bank's outlook. The economy improved to growing "modestly," he noted, from growing only "gradually" in the previous report.
The Beige Book provides anecdotal information on business conditions around the US. The information collected by the Fed's 12 regional banks will be used as the basis for the Fed's policy discussion at the October 23-24 meeting.
Economists expect no major moves at the meeting because the Fed adopted aggressive new policies in September. The Fed is buying mortgage bonds to lower longer-term rates, which could spur more borrowing and spending. It also plans to keep short-term interest rates near zero until at least the middle of 2015, even after the recovery shows signs of strengthening.
By making borrowing cheaper, the Fed hopes to fuel the modest housing recovery. When home prices rise, people tend to feel wealthier and spend more freely. Consumer spending drives nearly 70% of economic activity.
The Fed report noted that oil production hit a record high in South Dakota, while the Minneapolis, Kansas City and Dallas districts also saw robust gains in energy production. The Atlanta and Richmond districts reported record levels for port activity in their regions.
But the drought continued to weigh on farm activity in the Chicago, Minneapolis, Kansas City and Dallas districts. Dallas and Chicago reported that recent rains had improved the outlook in those districts.
US consumers have been cautious this year, which has contributed to slower growth. The economy grew at a lacklustre 1.3% annual rate in the second quarter, down from the 2% rate in the first three months of the year.
Economists expect growth to hover near 2% for the rest of the year. That is typically too weak to create enough jobs to rapidly bring relief to more than 12 million unemployed Americans. The job market is looking a little better.
The unemployment rate fell last month to 7.8%, down from 8.1% in August. It was the first time in more than three and a half years that the rate fell below 8%. And it fell because of a huge increase in the number of people who said they found jobs.
There have been some other encouraging signs. Car sales rose in September by 13% from a year earlier to nearly 1.2 million. Home sales have also been posting solid gains. And consumer confidence jumped in September, according to two closely watched surveys.
