WASHINGTON – The economy is gaining momentum, bolstered by home building, shipping and even the country’s beleaguered manufacturing sector, the Federal Reserve said Wednesday in a newly upbeat assessment.
Evidence of a strengthening economy showed up in other reports as well, while Wall Street hailed a big drop in oil prices.
The Commerce Department said consumer spending shot up by 0.7 percent in October, the best showing since July, as Americans’ incomes – the fuel for future spending – rose by 0.6 percent. The gain in incomes reflected the increase of 337,000 payroll jobs in October, the best in seven months.
Meanwhile, the Institute for Supply Management reported that its main index for measuring industrial activity performed better than expected, rising to 57.8 in November from 56.8 in October.
Wall Street took encouragement not only from the upbeat economic reports but also from the biggest one-day drop in crude oil prices in three years. Crude oil fell by $3.64 per barrel to settle at $45.49, its lowest level in New York trading since Sept. 16.
Relieved investors pushed the Dow Jones industrial average up by 162.20 points, the third best one-day gain of the year. The Dow finished the day at 10,590.22, its highest close since early March.
The Federal Reserve said that reports from its 12 regions “generally paint a picture of continued economic growth” from mid-October through mid-November, with improvements noted in a number of areas.
In fact, the Fed survey said 11 of its 12 regions reported expanding economic activity, with only the Cleveland district seeing little change.
The Fed’s latest “Beige Book,” named for the color of its cover, will be used when policy-makers meet for their last discussion of the year on Dec. 14. It is widely expected that the Fed will raise interest rates for a fifth straight time this year in an effort to make sure the rebounding economy does not trigger inflation.
The reviving economy has been having an effect on inflation in such industries as energy, transportation and food, but the Fed said retailers are still having difficulty passing those increased costs on to consumers because of stiff competition.
The Fed survey showed rising demand for manufactured goods, encouraging news for a portion of the economy that has seen the loss of 2.7 million jobs over the past four years.
There was rising demand for chemicals, food and a variety of products used in the aerospace, agriculture, energy, construction, medical and defense industries, the report said.
The rebound in manufacturing was helping job markets, and some areas of the country were even experiencing labor shortages for such occupations as accounting, construction and skilled professionals in the energy industry.
As for consumer spending, analysts said the 0.7 percent jump after a strong 0.6 percent rise in September showed that consumers, who account for two-thirds of total economic activity, were getting a second wind.
“Consumers were not deterred by higher oil prices and by consumer confidence numbers that keep on going lower,” said Ken Mayland, president of ClearView Economics.
Talk to us
> Give us your news tips.
> Send us a letter to the editor.
> More Herald contact information.
