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Housing, auto sales lift US economy: Fed survey

WASHINGTON -- A strengthening housing recovery and robust auto sales contributed to moderate economic growth across the United States in late February and March, according to a Federal Reserve survey released Wednesday.

Growth was moderate or modest in all of the Fed's 12 banking districts, and it accelerated in two — New York and Dallas — from January and early February.

The survey suggested that the economy performed better in March than some government data on hiring and consumer spending had indicated. That could mean the economic weakness might have been temporary.

The Fed survey, which is based on anecdotal reports, found that hiring was unchanged or improved slightly compared with the previous report. And it noted that consumer spending — which drives most of the economy — grew modestly. But the report also said higher taxes and a spike in gas prices had slowed sales.

By contrast, the Labor Department said earlier this month that job growth slowed sharply in March. And retail sales declined in March by the most in nine months, a separate report said last week.

Dana Saporta, an economist at Credit Suisse, said the survey “is consistent with the larger picture of steady if unspectacular growth.”

“We get caught up in the monthly volatility of the data, and we need to step back,” she said.

Zach Pandl, an economist at Columbia Management, an investment firm, said the survey's rosier tone is probably one reason that several Fed policymakers have recently expressed optimism despite sluggish economic data.

The Fed survey said the recovery in home construction is gaining momentum and creating more construction jobs. It's also boosting factory output of housing-related goods, such as lumber.

The report did note some weak spots. Several districts said manufacturers of defense-related goods had cut jobs in response to government spending cuts that started taking effect March 1.

Still, it said that growth overall was moderate, an upgrade from the “modest to moderate” pace in the previous two reports.

The Fed report, called the Beige Book, provides an overview of economic conditions from Feb. 22 through April 5. The information will be discussed along with other economic data during the Fed's next policy meeting April 30-May 1.

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