Beige Book Blues

U.S. growth slowed over the summer, but some sectors such as agriculture and manufacturing held up better than others, according to the Federal Reserve’s latest report on the economy.

The Fed survey, commonly known as the Beige Book, dovetails with a slew of data that shows the U.S. recovery has tapered off since the spring.

“The economy might have been going 55 miles an hour. Now we are going 45 miles an hour,” said economist John Canally of LPL Financial. “The economy is muddling along.”

According to the Beige Book, the biggest weaknesses were in real estate and construction. Home sales fell after the expiration of a popular federal tax credit and the commercial market “remained quite weak,” the Fed said.

Bank lending to companies, a harbinger of future growth, also saw scant improvement.

“Most districts reported little or no change from existing low levels of commercial and industrial lending, as businesses remained quite cautious about expansion plans,” the Fed said.

Yet despite recent weakness, the report also indicates the economy is still growing.

“Economic growth at a modest pace was the most common characterization of overall conditions,” the Beige Book said.

What’s more, the report said the price of wages and goods and services remained “limited,” indicating little inflationary pressure in the economy.

The latest Beige Book was compiled by the San Francisco Federal Reserve and based on information collected prior to Aug 30. Top Fed officials partly rely on the Beige Book to decide whether to alter interest rates or take other measures to improve the economy.

The Fed’s next major meeting is Sept. 21.