Federal Reserve's Beige Book: Economy Growing Modestly With Some Troubled Spots

Most parts of the country saw modest economic growth in the past month, although there were pockets of sluggishness as businesses continued to cope with fallout from the troubled housing and automotive industries.

Information in the new snapshot, released Wednesday by the Federal Reserve, was collected before last week's gut-wrenching nosedive in worldwide financial markets, in part reflecting investors' worries about the health of the U.S. and Chinese economies.

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Nonetheless, the survey is consistent with Fed chairman Ben Bernanke's view — repeated anew after the market meltdown — that the central bank continues to foresee "moderate growth going forward."

Information from the survey will figure into discussions at the central bank's next meeting on March 20-21. Many economists expect the Fed will continue to hold interest rates steady, which it has done since August. Before that, the Fed had steadily boosted rates for two years to fend off inflation.

The Fed's goal is to slow the economy sufficiently to curb inflation but not so much as to cripple economic growth.

The survey suggested that the price climate during the last month has been fairly steady, with most of the Fed's 12 regional districts characterizing "price pressures as little changed." And, even with the job market staying healthy in most parts of the country, workers' pay increases "generally remained moderate." Both observations in the Fed survey offered hopeful signs that inflation isn't flaring up.

The survey is based on information supplied by the Fed's 12 regional banks and collected on or before Feb. 26.

On the economic growth front, the survey said that "most Federal Reserve districts reported modest expansion in economic activity" over the past month but "several districts noted some slowing." For instance, the New York region said that although growth is "well maintained" there were a "few signs of deceleration." The St. Louis district said activity "increased more slowly." The Boston district reported some "softening" in economic activity and the Dallas region said business activity "continued to decelerate," the Fed said.

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