Fed: Recovery Hampered by Weak Lending
WASHINGTON - The economy is recovering unevenly, hindered in part by sluggish loan activity, the Federal Reserve Board reported Wednesday.
An upswing in manufacturing is propelling a weak revival, particularly in the Midwest, according to the Beige Book, a periodic report on regional economic conditions that Fed officials use to guide monetary policy.
But while rising industrial production sparked the Cleveland and Chicago districts, others - notably Boston and San Francisco - still languished.
Loss of Momentum
There were only scattered signs of improvement in retail sales and consumer spending - areas where Fed economists cited modest improvements six weeks ago. And the housing sector appears to be losing the upward momentum it gained in the spring, the Fed noted.
Amid weak demand, business lending declined in the Chicago, Cleveland, Philadelphia, and St. Louis districts. Consumer lending, too, generally either fell or held steady, though some improvement was reported in the Atlanta district.
Mortgage lending was generally flat, with most districts reporting little demand for, or slight declines in, new mortgages. Fewer than half of the districts had increases in housing sales and housing starts. On a brighter note, affordability improved as mortgage rates and home prices declined.
The Fed found commercial construction "at a virtual standstill" in many districts.