Economy improves at modest pace in many regions, Fed says

The economy improved in nine of the Federal Reserve’s 12 regions in January and February while being hampered by snowstorms in the eastern U.S., the central bank said Wednesday.

“In most cases the increases were modest,” the Fed said in its Beige Book business survey, published two weeks before the Federal Open Market Committee meets to set monetary policy. Consumer spending increased in many regions, while commercial real estate and loan demand were “weak” and labor markets “soft,” the Fed said.

The report informs Fed policymakers ahead of their next meeting March 16. Although Chairman Ben S. Bernanke reiterated that the Fed would leave rates very low for an “extended period” in congressional testimony last week, Kansas City Fed President Thomas Hoenig, the longest-serving policymaker, wants to eliminate the phrase because the financial crisis is fading.

The report probably reinforces the likelihood that policymakers will repeat the “extended period” language this month, said Michael Feroli, an economist at JPMorgan Chase & Co. The Fed said Wednesday that although consumer spending “improved slightly in many districts,” the snowstorms in February “limited activity” in some.