The economy registered modest growth in the early summer, considering how consumers and some businesses were buffeted by both high gasoline prices and the sour housing market.
That's the gist of a Federal Reserve region-by-region survey known as the Beige Book, released Wednesday, which also showed the economy clearly has emerged from a rut at the start of the year and is now growing, albeit slowly.
On the inflation front, consumer prices continued to increase "at a moderate rate," the Fed report said. "Almost every region said that oil and gasoline prices were either rising, high or an issue," it noted. Gas prices have climbed past $3 a gallon nationwide.
Fed chairman Ben Bernanke told Congress last week that he expects the economy to grow gradually through the course of this year and to strengthen a bit next year. He said that inflation remains the chief concern.
Information from the Fed survey will figure into discussions at the central bank's next meeting, Aug. 7. Economists predict that the Fed at that time will again vote to hold a key interest rate at 5.25 percent, where it has stood for more than a year.
Consumer spending - a major shaper of overall economic activity - continued to grow in the early summer. However, a number of Fed regions reported that high gas prices restrained purchases. And, five of the Fed's 12 regions said that retail sales of housing-related items - such as furniture and home repair materials - were weak or declining. Tourism reports, meanwhile, were mostly positive.
The economy has rebounded and is expected to clock in at a pace of about 3.2 percent for the April-to-June period. The government will release the second quarter's results Friday. Growth in the second quarter will probably be powered by a revival in business investment, while consumer spending is expected to be somewhat subdued.
The Fed survey noted that manufacturing activity grew in most Fed regions. Strong gains were noted by consulting, advertising, health care, scientific and telecommunications firms.
Employment, meanwhile, continued to increase "in most locations and in many sectors of the economy," the Fed said. The nation's unemployment rate is currently at 4.5 percent, low by historical standards.
Even with the sturdy labor market, many regions described overall wage gains for workers as moderate. However, many also pointed out that there's "significant upward pressure on wages and salaries" for highly skilled workers.
The survey is based on information supplied by the Fed's 12 regional banks collected on or before July 16.
Vehicle sales: "New vehicle registrations were much lower than last year, with Florida having the weakest performance."
Tourism: "Activity was holding up better than expected given high gasoline prices. Summer visitor numbers were described as good by contacts at North Florida hotels, and were stable in Miami and along the Alabama coast."
Agriculture: "The lack of rains will significantly impact the corn and cotton crops in Alabama, and the peanut crop in Alabama, Florida and Georgia. In Florida, tree destruction from past hurricanes as well as spreading diseases has resulted in a downward revision for this season's orange crop."
Residential real estate: "Single-family home sales have stabilized in some Florida markets. ... Florida homebuilders anticipate flat sales over the next few months compared with a year ago, while the majority of Realtor contacts expect sales to decline further.
Commercial real estate: "Reports from commercial contractors indicated that the pace of nonresidential development in the second quarter was flat to slightly down in Florida compared with a year ago, and increasing moderately elsewhere. Overall, most contractors (in the Southeast) outside Florida anticipate that activity will exceed year-ago levels for the remainder of the year."
Source: Federal Reserve's Beige Book, July 25