Washington, DC, United States (4E) – The U.S. economy expanded in what the Federal Reserve describes as “modest to moderate” growth rate from June to early July, while the Fed’s Beige Book business survey reports that manufacturing activity continued its expansion albeit slow in most of its 12 federal regions.
The Beige Book’s findings support the notion that the economy has slowed down during the first half of the year. This view is also backed by Fed Chairman Ben Bernanke who will discuss the economy with other members of the Federal Open Market Committee (FOMC) when they meet in Washington at the end of the month.
Bernanke was speaking for the second day in the U.S. House of Representatives for his semi-annual congressional testimony on Wednesday, repeating what he mentioned the previous day at the Senate that progress is “frustratingly slow” in curbing unemployment although he stated that the Fed is prepared to take further steps to bring the economy back to growth when needed.
The policy-making FOMC will hold its two-day meeting that starts on July 31. Last month, the group voted for the extension of Operation Twist, which aims to keep long-term borrowing costs low by selling shorter-term assets in order to purchase longer-term assets.
Four policy makers are currently receptive to the idea of more asset purchases according to Atlanta Fed President Dennis Lockhart who made the comment last week citing the minutes of the June FOMC meeting.
The Beige Report, which was released by the Federal Reserve on Wednesday, also found that the housing markets remain positive as sales rose and inventories fell in most of the Fed’s districts.
This is in line with the June housing report released by the Department of Commerce Wednesday showing that construction activity in the U.S. increased 6.9 per cent from May, which is the highest month-over-month difference in seven months. Last month also saw the highest number of new homes built since October 2008.
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