The Federal Reserve said the U.S. economy expanded at a “modest to moderate pace” in January and early February as factories increased production.
“Manufacturing continued to expand at a steady pace across the nation,” with “several districts indicating gains in capital spending, especially in auto-related industries,” the Fed said today in its Beige Book business survey, published two weeks before the Federal Open Market Committee meets to set monetary policy.
Chairman Ben S. Bernanke said in congressional testimony today that maintaining monetary stimulus is warranted even as the unemployment rate falls and rising oil prices may cause inflation to rise temporarily. Policy makers, who next meet on March 13, said in January that economic slack and subdued inflation are likely to warrant exceptionally low rates through late 2014, extending a previous date of mid-2013.
“The Beige Book shows the economy continues to do better, but has a long way to go before it is robust,” said Ward McCarthy, chief financial economist at Jefferies & Co. in New York. “It is slightly more upbeat” than the prior two reports.”Growth is still very slow two and a half years into a recovery.”
