The American economy is growing at a "moderate or modest" pace, supported in particular by the good performance of the residential real estate sector and the automotive sector. This is what we read in the Beige Book, the report on the American economy that the Federal Reserve publishes every six weeks and which provides a relatively better picture than the individual macroeconomic data released previously. "Unchanged or slightly improving" the conditions of the labor market, in the light of "more general hiring in the manufacturing, residential construction, information technology and professional services sectors".
The Fed also highlighted uncertainty in the defense sector, triggered above all by the automatic spending cuts triggered last March 1 as part of the so-called sequester: "In particular in the San Francisco district, "layoffs, factory closures and production cuts,” reads the document. Consumer spending was also under pressure, held back by the rise in petrol prices and the increase in payroll levies decided as part of the agreement to avoid the fiscal cliff.
The action of the Federal Reserve is also supporting the situation, which during the last meeting decided to continue with the extraordinary measures to stimulate the economy and in particular with the purchase of bonds for 85 billion dollars a month. The duration of the Fed's action, already discussed during the last meeting, will be at the center of the meeting to be held on April 30-May 1.
Returning to the Beige Book, the Fed pointed out that in a context of slow growth, the real estate and automotive sectors have an edge. While the manufacturing and retail sectors are feeling the effects of the sequester's cuts: "looking ahead, retailers expect only modest growth in sales in the short term", we read.
