Economy growing despite energy, housing

WASHINGTON - 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, released Wednesday, which also showed the economy clearly has emerged from a rut at the beginning 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.
The biggest threat to the economy is if inflation doesn’t recede as Fed policymakers anticipate, Bernanke explained, when he delivered the Fed’s midyear economic assessment to Capitol Hill.
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 3 percent or better for the April-to-June period. The government will release the second quarter’s results on Friday. Growth in the second quarter is expected to be powered by a revival in business investment, while consumer spending is expected to be somewhat subdued.
The housing slump, which started last year, continued to be felt in most areas.
Most regions said home building declined and residential real-estate activity was weak. New York, however said housing markets were “mixed but stable.” The Cleveland and Richmond regions said sales increased slightly. Reports on home prices around the country were mixed, the Fed said.