Fed Sees Economy 'On Track'

March 15, 2006 — -- In its most recent Beige Book released this afternoon, the Federal Reserve said U.S. economic expansion "remained on track" during the current period.

The Fed said growth in consumer spending seems solid, while employment improves continually and consumer inflation is moderate. The U.S. central bank sees some slowing in the residential housing market, but commercial real estate seems to have picked up.

The Beige Book, a report the Fed publishes eight times a year, is generally released about two weeks before a Fed interest rate meeting.

The report is made up of anecdotal information from all 12 of the Fed's regional banks.

Some highlights from the most-recent report:

• Many districts reported solid gains in retail sales during January, which retailers frequently said were spurred in part by unseasonably warm weather and holiday gift-card redemptions.
• Employment continued to increase in most locations and in many sectors of the economy.
• Construction and real estate activity was mixed according to market segment and location. Most districts reported that residential real estate activity had slowed from high levels.

How much does this matter? This is moderately important. The anecdotal information is used by Fed governors when they meet to discuss interest rate hikes. The next interest rate meeting is scheduled for March 28. 

Definition: The report is compiled from anecdotal information gathered by regional Federal Reserve Banks about current economic conditions. Each district has reports from bank and branch directors, and interviews with key business contacts, economists, market experts and other sources.