Economic activity downshifted in parts of the U.S. in recent months, the Federal Reserve said, with a few areas reporting a hit to consumer spending tied to recent market turmoil.
Just half of the Fed’s 12 districts reported modest or moderate growth since early January, according to the central bank’s “beige book” summary of regional economic conditions released Wednesday. The prior report showed nine districts expanding at that pace.
Three Fed districts cited the financial-market turmoil that kicked off 2016 as one factor behind consumers’ reluctance to spend, along with economic uncertainty and a reluctance to add to existing debt.
Consumer spending, which accounts for more than two-thirds of U.S. output, still rose in the majority of the districts. Business contacts across the country were “generally optimistic about future economic growth,” the central bank said.
The latest report “is further proof that the U.S. economy is growing steadily, and not falling into recession,” PNC economists said in a note to clients. “Consumer spending, the housing market, and commercial construction continue to lead growth in early 2016.”
Domestically oriented sectors appeared stable as consumers continued to spend and the labor market added jobs. But sectors with more overseas exposure have taken a hit from low commodity prices, economic slowdown overseas and the strength of the U.S. dollar.