The Federal Reserve reports that the U.S. economy grew at a modest rate this fall, with solid gains in consumer spending helping offset lingering weakness in exports.
The Fed's survey of economic conditions around the country found that seven of its 12 districts described growth as modest to moderate. Another three districts — Philadelphia, Cleveland and Kansas City — saw a "slight" pace of growth. Richmond viewed activity as mixed, and New York said activity had been flat.
The survey, known as the "Beige Book," will be used when Fed officials meet on Dec. 13-14. The central bank is expected to raise a key interest rate slightly in response to steady gains in employment and a modest pickup in inflation. The Fed has not raised rates in a year.
A majority of districts reported higher retail sales, especially for clothing and furniture. These gains helped to offset a slowdown in sales of new autos. Some districts noted a shift in purchases from new cars to used vehicles.
Manufacturing demand was described as mixed, with some weakness attributed to lingering effects from the rise of the dollar, which makes U.S. products less competitive in overseas markets.
The dollar's strength has been a drag on manufacturing for most of this year. The report said that the strong dollar remained a concern for exporters in the Boston, Dallas and San Francisco districts. But manufacturers of chemicals, autos, aerospace products and the electronics industry in various regions reported signs of a rebound in demand.
The strong dollar was dampening sales for some farm products. San Francisco noted that the strong dollar was continuing to hold back exports of agricultural products, particularly apples and pears.
Farmers around the country were generally satisfied with this year's harvests, although the Richmond district reported the loss of 4 million to 5 million birds killed by Hurricane Matthew and related floods.
Seven districts — Boston, New York, Philadelphia, Atlanta, Chicago, St. Louis and Dallas — reported that the demand for workers was increasing, giving a boost job seekers. Wage growth was still generally described as modest, although some districts said there were scattered reports of rising wage pressures for select in-demand occupations.
The Fed boosted its benchmark rate by a quarter-point last December to a range of 0.25 percent to 0.5 percent. Until then, it held the rate a record low near zero for seven years in an effort to help the economy recover from the worst recession since the 1930s.
Many economists believe if the Fed raises rates in December, it will increase rates another two times in 2017. But some analysts believe rates could go up even faster next year if President-elect Donald Trump is successful in his efforts to cut taxes cuts and spend more on infrastructure projects. Those policy moves could boost inflation pressures.