Fed Notes Economic Growth

The U.S. economy showed widespread growth from mid-February through early April, but inflation wasn’t a problem, the Federal Reserve said Wednesday in its latest survey of regional economic conditions.

“Economic activity increased across the nation,” according to the survey, known as the beige book for the color of its cover.

Despite “significant increases in numerous commodities and input products,” the report said, “many districts reported modest increases in overall consumer prices,” and that wage increases also remained modest.

The report backed Fed Chairman Alan Greenspan’s testimony to Congress on Wednesday. The central bank chief indicated that there was no broad-based inflation pressure despite the economy’s advance.

A noticeable increase in retail sales was seen in most of the Fed’s 12 districts, and “retail contacts were optimistic for growth during late spring and summer,” the survey said.

Manufacturing activity increased in all districts. Commercial real estate markets remained “soft,” while residential markets were said to be strong.

Business activity in the San Francisco Fed district, which includes California as well as Arizona, Idaho, Nevada, Oregon, Utah and Washington, “acquired some additional momentum” from what already was a “firm expansion,” the survey said.

It described residential real estate activity in the region overall as robust. In the commercial real estate market, the report cited solid demand for industrial and retail space in parts of Southern California.

The report also noted substantial sales gains in the Southland restaurant industry.

“Upward wage and salary pressures in the [Western] district were quite modest during the survey period,” the report said. But rising costs for health benefits “increased labor costs somewhat, and employers have responded in part by shifting some of the burden to workers.”