Fed: Shutdown fears put damper on growth
The economy in the Federal Reserve district that includes Pittsburgh continued to expand at a moderate pace from September through early October, as manufacturing and commercial construction grew while retail sales were disappointing.
But the Federal Reserve said Wednesday in its periodic Beige Book report that growth slowed during the reporting period in four key districts — Philadelphia, Richmond, Chicago, and Kansas City — as businesses grew worried about a budget impasse that led to a partial government shutdown. Eight of the Fed's 12 districts reported the same growth rate as they last reported.
Western Pennsylvania is part of the Fourth District, which includes West Virginia's northern panhandle, Ohio and eastern Kentucky. Pittsburgh is the largest metropolitan area in the district, while eight of the 10 largest are in Ohio.
In the district, housing activity leveled out after a six-month period of strong growth, as sales of new and existing homes were above year-ago levels. And new motor vehicle purchases posted robust gains on a year-over-year basis.
“What we're seeing here and nationally is growth in employment, but not at the pace that we would like to see four years into the recovery,” said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh.
The report said hiring was sluggish across industry sectors. Staffing firm representatives reported that the number of job openings increased, with vacancies found primarily in health care and manufacturing. However, job placements were lower.
Faucher said energy production was a positive, as shale drilling picked up in regions rich in wet gas and was above year-ago levels.
Overall, the economy continued to expand at a “modest to moderate” pace, according to the Fed survey.
Businesses around the country remained optimistic about the future and consumer spending continued to increase, helped by strong auto sales. But many businesses noted greater uncertainty because of the federal shutdown, which began on Oct. 1.
Jennifer Lee, senior economist at BMO Capital Markets, said that the Fed's survey showed that there had been only limited damage to the economy at least through the first week of the shutdown.
The Fed's survey will be used by central bank policymakers in their next meeting on Oct. 29-30. Economists believe the Fed will maintain its $85-billion-a-month in bond purchases to offset the effects of the shutdown.
The Associated Press contributed to this report. John D. Oravecz is a Trib Total Media staff writer. Reach him at 412- 320-7882 or firstname.lastname@example.org.