WASHINGTON — The US economy picked up in September despite weak momentum in consumer spending, a Federal Reserve survey of regional economies published Wednesday showed.
In its Beige Book report, used for policy decisions, the Fed said that economic activity “generally expanded modestly” since the last report six weeks earlier, when it characterized growth as only gradual.
The relatively upbeat assessment came as the economy remains uppermost in voters’ minds. Only 26 days before the November 6 election, President Barack Obama and Republican nominee Mitt Romney remained locked in a tight race, with Obama’s fate tied in part to how voters judge his record in restoring economic growth.
The latest Beige Book showed an increasing number of the central bank’s 12 districts found growth “continued at a modest pace,” with only one reporting growth was “leveling off” and another indicating “some slowing.”
The embattled housing market continued to improve, home construction was rising, manufacturing was mixed but heading in the right direction, and activity in the energy sector “remained robust.”
Inflation pressures were modest, with most districts reporting “little change” in prices of finished goods and inputs.
On the downside, the ailing labor market was little changed.
“Stagnant demand and uncertainty related to the upcoming presidential election, US fiscal policy, and European debt issues” were restraining hiring, according to some of the businesses polled for the survey.
Consumer spending, which accounts for about 70 percent of US economic activity, cast a warning signal ahead of the crucial year-end holiday shopping season.
“Consumer spending was generally reported to be flat to up slightly,” compared with stronger growth in the prior period, the Fed said.
Some analysts suggested the economy’s report card was tilting toward a better grade, while others were less optimistic.
“Overall, even though economic growth has proceeded slowly and has been weighed down by uncertainty, this report shows that economic growth has some solid underlying trends and does not seem to be as fragile as it appears at first glance,” Barclays Research analysts said.
Chris Low at FTN Financial noted there was nothing in the report that suggested acceleration in the economy.
“Housing is strengthening and manufacturing activity appears to be modestly better, but consumption appears to have cooled a bit from the last Fed survey so that, on balance, economic activity looks to be little changed.”
The latest Beige Book gives Fed policymakers a snapshot of the world’s biggest economy ahead of the October 23-24 meeting of the Federal Open Market Committee.
In its September 12-13 meeting, the FOMC decided to launch a $40 billion a month bond-buying program to help lower long-term interest rates and prop up the flagging economy.
The third round of quantitative easing, known as QE3, unlike the prior rounds, has no set date for winding down, giving the Fed unlimited leeway to provide stimulus.
The US economy expanded only 1.3 percent in the second quarter, continuing a sharp slowdown from the tail end of 2011.
Although growth last month marked an improvement over August’s report, it was still short of the economy’s “moderate” bill of health in June, said Sal Guatieri at BMO Capital Markets.
“Signs of slowing or mixed growth were less evident than in the previous report,” said Eduardo Martinez at Moody’s Analytics.