WASHINGTON -- Strong economic growth continues, the Federal Reserve reported Wednesday.
"Economic activity generally is continuing to expand at about the same pace as in recent months," the Fed concluded in the Beige Book, its periodic survey of regional economic conditions.
Meanwhile, Fed Chairman Alan Greenspan told the HouseSenate Joint Economic Committee that economic growth in 1994 was stronger than the central bank had anticipated earlier this year, in part because banks eased loan terms.
"Spending in 1994 has been encouraged by the greater willingness of banks and other lenders to extend credit following a protracted period of bank lending restraint that was characterized as the 'credit crunch,'" Mr. Greenspan said.
Mr. Greenspan also said that the Fed's six interest rate hikes this year may not have curbed spending because not all of the increases are being passed on to borrowers.
The spreads of bank loan rates over market rates have narrowed for many business and household borrowers, some fees have been cut, and loan approval standards have eased, he said.
"This is a trend we are monitoring carefully, not only in our role as monetary policy markers, but also as bank supervisors with responsibility for the safety and soundness of the banking system," Mr. Greenspan said.
Home construction has also burgeoned with "some easing in the standards that mortgage lenders use in qualifying prospective homebuyers," Mr. Greenspan said.
"Loan demand is up in most districts," the Fed survey found, "led by consumer loans and commercial and industrial lending."
"While single-family homebuilding continues to slow across most districts, commercial real estate markets and nonresidential construction have picked up in many districts," according to the Beige Book. "Consumer lending continues to grow in many regions, led by new automobile loans."