By Martin Crustinger Associated Press
WASHINGTON — The final weeks of 2011 were the economy’s best since it seemed to be slipping toward recession in late spring — a shot of optimism for 2012.
Consumers spent more freely. Factories made more goods. Americans stepped up travel. And the auto industry enjoyed its best stretch of the year.
That’s the bright picture the Federal Reserve sketched in a survey released Wednesday. It said all but one of its 12 banking districts experienced some growth from late November through the end of the year.
The one exception was Richmond. Even in that district, the Fed said economic activity either “flattened or improved slightly.”
The Fed said that some sectors of the economy, notably housing, remain weak. But overall, the message was encouraging. It comes just six months after the economy nearly stalled under the weight of high food and gas prices and supply disruptions from Japan that slowed U.S. manufacturing.
The economy and the job market have both improved since then. And December may end up being the strongest month of 2011. Employers added 200,000 jobs. And the unemployment rate fell to 8.5 percent — the lowest rate in nearly three years.
“The Fed’s report Wednesday confirms what everyone else has been seeing in the economic data from retail sales to auto sales and manufacturing — activity is improving,” said Jennifer Lee, senior economist at BMO Capital Markets.
Most of the Fed’s districts reported holiday sales increased over last year. In particular, the New York and Dallas districted reported healthy gains. Boston, New York and Minneapolis reported exceptional growth in online sales.
Consumers are spending more on cars and travel, the survey noted. Auto sales in the Atlanta area were the best sales in more than two years. Boston, New York, Richmond and Atlanta experienced gains in tourism from a year ago. In Boston alone, businesses expect double-digit growth in hotel revenue in 2012.
U.S. manufacturing continued to lift the economy, particularly in industries that make heavy equipment and steel. That has helped boost energy, farming and auto manufacturing sectors, the report said.
The depressed housing market has hurt some manufactures. As an example, the Fed cited weakness among furniture manufacturers in the Richmond, St. Louis and San Francisco districts.
Inflation remained subdued, largely because high energy prices have eased. That may change in the new year. Oil has climbed above $100 a barrel again, and gas prices are creeping up.
The strength shown in the Fed survey reflected other positive economic reports.
Consumer confidence hit its highest point since spring. U.S. automakers reported their two best months of sales for 2011 in November and December. And U.S. factories ended the year with their best month of growth since spring.
Most economists are predicting the economy grew at an annual rate of 3 percent in the final three months of last year. That would be an improvement from the summer, when the economy expanded just 1.8 percent. And it would be much better than the 0.9 percent annual growth rate in the first half of the year.
Still, the U.S. economic recovery remains vulnerable to setbacks. Europe’s debt crisis could lower demand for U.S. exports. Consumers may pull back on spending, especially if their wages continue to stagnate.
And Congress could decide not to extend a Social Security tax cut or long-term unemployment benefits. Both expire at the end of February. That would leave many households with less income and could slow spending.
The Fed has been studying the economy’s progress but announced no new actions to try to energize it after its Dec. 13 meeting. That was taken as a sign of confidence that the economy was in no immediate danger.
But in the minutes from the meeting released last week, the Fed said it will start this month announcing four times a year how long it plans to keep short-term interest rates at existing levels.
The change is intended to reassure consumers and investors that they will be able to borrow cheaply well into the future. And some economists said it could lead to further Fed action to try to invigorate the economy.
The Fed’s next meeting is Jan. 24 and 25.
The Beige Book is released eight times a year. The findings from each of the Fed’s regional bank districts are all anecdotal; there are no numbers.
The idea is to detect trends in consumer spending, manufacturing and real estate, among other areas. Consumer spending is particularly important because it accounts for about 70 percent of gross domestic product. GDP is the value of all goods and services produced in the United States.