Fed Report Says Economy Is Moving at Moderate Pace

WASHINGTON —  The nation’s economy is advancing at a slow to modest rate with substantial regional variation, the Federal Reserve Board said Wednesday in its “beige book” on current economic conditions.

The report, prepared for an Oct. 3 meeting of the Fed’s top economic policy-makers, said consumer spending, construction and manufacturing activity was mixed, while agricultural conditions have continued to improve.

The new report appeared slightly more upbeat than the Fed’s last statement in early August when it said the economy was growing slowly.

Many economists now see the economy in a pattern of modest growth and low inflation on track for the “soft landing” scenario favored by Fed Chairman Alan Greenspan.

The report was compiled by the Federal Reserve Bank of St. Louis based on business and economic surveys conducted by the 12 Fed district banks before Sept. 12.

The Fed gave no overall survey of the nation’s inflation outlook, although five districts reported that raw material prices have eased for manufacturers. Only the Kansas City district found higher prices.

Outlook Could Clear

The government reported Monday that consumer prices were flat in August--the first time prices failed to rise in more than three years. At the same time, consumer spending has moderated, export gains have cooled and housing construction has eased after expanding in June and July.

The government could clear up the economic outlook today when it issues its third and final estimate of second-quarter economic growth. A month ago, it put the second-quarter gross national product at 2.7%.

Many of the Fed districts in their separate summaries said growth was modest, sluggish, mixed or soft, with the direction decidedly muddled.

The 12th district of San Francisco stood alone in a report of healthy growth in the West, supported by robust consumer spending, stable manufacturing, strong exports and good crop yields. The San Francisco Fed also said expectations of growth are rising.

Atlanta, the 6th Fed district, said the weakness in business activity has abated and expections have brightened for the remainder of the year. The 2nd district of New York also found recent signs of strength.

In contrast, St. Louis reported sluggish growth with no change in sight, while Philadelphia said manufacturing continues to soften in a climate of modest growth.

‘Generally Satisfactory’

The varied pattern of economic growth was echoed in the summary provided by the Fed in the opening pages of its beige book report.

“Consumer spending has been mixed, but most districts report strong sales of apparel and cars recently,” the Fed said.