Pauls Valley, OK, Pauls Valley Democrat

Nation / World News

June 8, 2011

Fed survey: Economy falters in several US regions

Washington, D.C. — For the first time this year, the economy has slowed in several U.S. regions, burdened by high gas prices that have weakened consumer spending and crises in Japan that reduced manufacturing output.

All 12 of the Federal Reserve's bank regions grew this spring. But four regions endured slower growth in April and May compared with earlier this year, a Fed survey released Wednesday showed.

It was the weakest survey since fall, when two regions failed to grow at all. And it confirmed a slew of recent data that portray a national economy whose growth has faltered. Hiring has slowed, orders to factories have declined and home prices have fallen.

Still, many economists agree with comments Fed Chairman Ben Bernanke made Tuesday. Bernanke noted that the economy has weakened in recent weeks. But he suggested that the slowdown from high gas prices and Japan's crises is temporary and that growth should pick up later this year.

"The report is consistent with the softening in consumption and production seen in recent data," said Michael Gapen, senior U.S. economist at Barclays Capital. "We believe that the main factors constraining activity - higher energy prices and supply-chain disruptions - will be transitory."

The Fed's reports have generally brightened since it concluded that the economy slowed in all its districts in the fall of 2008, after the financial crisis erupted. By the spring of 2010, economic activity had accelerated in all 12 districts for the first time since the recession ended in June 2009.

Fears over Europe's debt crisis contributed to downbeat reports last summer and fall. But by the end of last year, economic growth had picked up, and all 12 districts showed improvement. They continued to do so — until Wednesday's report.

Fed banks in New York, Philadelphia, Atlanta and Chicago said growth weakened in those regions. By contrast, the Fed regions in Boston, Cleveland, Richmond, St. Louis, Minneapolis, Kansas City and San Francisco said growth there remained steady.

The Dallas region was the only one to report accelerating growth. That was mostly because of higher oil prices, which benefited its energy industry.

The report, known as the "Beige Book," is based on anecdotal information gathered by officials at the Fed regional banks. It is released eight times a year and provides a more in-the-trenches review of the economy than government statistics do. Wednesday's report covered the roughly seven weeks between April 5 and May 27.

Japan's March 11 earthquake and tsunami disrupted auto production and sales. That helps explain why manufacturing output grew more slowly in five districts. Many factories in the United States owned by Japanese automakers, including Toyota and Honda, rely on Japanese suppliers for electronic components and other parts. They've had to cut output because of shortages of those supplies.

Such production cuts, in turn, have reduced the flow of cars to dealers. Auto sales in the New York, Philadelphia and Cleveland districts have declined.

Looking ahead, several districts have turned less optimistic about manufacturing. Boston said some of its manufacturers think sales will slow in coming months. The Cleveland Fed said some companies are delaying large-scale projects.

But the Chicago and Atlanta banks said factories in their districts expect to expand output in the second half of the year, in part because of a likely rebound in auto production.

Retail sales declined in the Richmond and Boston districts and grew more slowly in the New York, Atlanta, Chicago, St. Louis and San Francisco regions. High gas prices were the main reason.

The New York Fed said a major retail chain and a large mall in upstate New York reported slower sales in May, after robust sales in April. Gas prices nationwide averaged nearly $4 a gallon in early May, before falling back.

Farms were damaged by flooding along the Mississippi River last month, which put millions of acres of cropland under water. And in the Dallas region, a drought harmed the wheat crop. Agricultural conditions were unfavorable across much of the nation, the report said.

Despite the slowdown reflected in Wednesday's report, it still pointed to an economy stronger than it was at times in 2010. Several Beige Books last year indicated that growth in some regions had slowed or even stalled.

Copyright 2011 The Associated Press.

Text Only
Nation / World News
  • 03-05 Henryville 4 wb.jpg SLIDESHOW: Aftermath of Indiana tornado Residents in Henryville, Ind., surveyed the damage Saturday after a deadly EF-4 tornado touched down Friday evening, ripping apart homes, schools and businesses.

    March 5, 2012

  • image_preview.jpeg Group honors troop remains dumped in landfill

    Maybe it's because they live just a few miles from a stone memorial to Confederate Gen. Stonewall Jackson's severed left arm. But when a group of residents from Virginia's Northern Neck heard that the cremated body parts of American troops had been dumped unceremoniously in a local landfill, they knew what to do: Mark the place - rotting garbage and all - as sacred ground.

    September 25, 2012 1 Photo

  • US unemployment aid applications stay at 370,000

    The number of people seeking U.S. unemployment benefits was unchanged last week, suggesting modest but steady gains in the job market.

    May 17, 2012

  • No Child Left Behind: 10 states fleeing education law

    President Barack Obama on Thursday declared that 10 states are free from the No Child Left Behind law, allowing them to scrap some of the most rigorous and unpopular mandates in American education. In exchange, the states are promising higher standards and more creative ways to measure what students are learning.

    February 9, 2012

  • volkswagon.jpg Best Super Bowl ad? Vote for your favorite

    Naked M&Ms, an out-of-shape dog on a mission and Clint Eastwood delivering a passionate speech about American adversity -- these are among the favorite commercials that aired during Sunday's Super Bowl.

    February 6, 2012 1 Photo

  • flour-mess.jpg Viral video: Kids cover living room in flour

    There's no question toddlers are capable of making some serious messes, and the latest viral video making the rounds on YouTube claims to show an award-winning mess made by two boys and a bag of flour.

    November 23, 2011 1 Photo

  • smoking.jpg States with most, fewest smokers revealed

    Which states have the highest smoking rates, and which have the lowest? New data released Thursday about smoking rates coincides with the American Cancer Society's Great American Smokeout.

    November 19, 2011 1 Photo

  • OSU-crash.jpg Slideshow: Other tragic plane crashes in sports history The sports world has lost several athletes and even whole teams to air tragedies such as the one that took the lives of the Oklahoma State University women's basketball coach and his assistant on Thursday night.

    November 19, 2011

  • Pipeline Protest.jpg US delays massive oil pipeline from Canada

    The Obama administration said Thursday it is delaying approval of a massive oil pipeline until it can study new potential routes that avoid environmentally sensitive areas of Nebraska, an action that likely puts off a decision until after the 2012 election.

    November 10, 2011 1 Photo

  • Libya confirms Gadhafi has been killed

    Libyan Prime Minister Mahmoud Jibril says Moammar Gadhafi has been killed.

    "We have been waiting for this moment for a long time. Moammar Gadhafi has been killed," Jibril told a news conference in the capital Tripoli.

    During nearly 42 years in power in Libya, Moammar Gadhafi was one of the world's most eccentric dictators, so mercurial that he was both condemned and courted by the West, while he brutally warped his country with his idiosyncratic vision of autocratic rule until he was finally toppled by his own people.

    October 20, 2011

Business Marquee

  • How You Want It When You Want It Today's Pauls Valley Democrat

    Now you can view and download the Democrat right to your desktop on the day the paper is published. Click here to get more information on the Democrat's e-Edition.





    e-mail request to

    April 20, 2011 1 Photo 1 Link

AP Video
Kerry: Humanitarian Cease-fire Efforts Continue Raw: Corruption Trial Begins for Former Va Gov. The Carbon Trap: US Exports Global Warming UN Security Council Calls for Gaza Cease-fire Traditional African Dishes Teach Healthy Eating 13 Struck by Lightning on Calif. Beach Baseball Hall of Famers Inducted Israel, Hamas Trade Fire Despite Truce in Gaza Italy's Nibali Set to Win First Tour De France Raw: Shipwrecked Concordia Completes Last Voyage Raw: Sea Turtle Hatchlings Emerge From Nest Raw: Massive Dust Storm Covers Phoenix 12-hour Cease-fire in Gaza Fighting Begins Raw: Bolivian Dancers Attempt to Break Record Raw: Israel, Palestine Supporters Rally in US Raw: Air Algerie Flight 5017 Wreckage Virginia Governor Tours Tornado Aftermath Judge Faces Heat Over Offer to Help Migrant Kids Kangaroo Goes Missing in Oklahoma More M17 Bodies Return, Sanctions on Russia Grow