WASHINGTON -- The U.S. economy continued to lose steam heading into June, with a marked weakening in demand for autos and other consumer goods, the Federal Reserve said yesterday.
Inflation, meantime, remained under control, the Fed said in its so-called beige book report on economic conditions in the United States. The survey is based on reports from the Fed's 12 district banks collected before June 12.
Though the Fed described the level of economic activity as "high," it also found regional variations, with much of the strength in the inland states and "generally less favorable conditions on the East and West coasts."
In the Richmond, Va., district, which includes Maryland, the Fed reported that "the rate of expansion appears to have decreased." Retailers, service producers and manufacturers all reported slower growth, and governments expected a slowdown in tax revenue.
On the positive side, port and tourism activity was up.
Overall in the United States, retail store sales improved from earlier in the year. While sales remained strong for electronics, industrial equipment and other capital goods, manufacturers reported weakening demand for autos and parts, building materials and other consumer goods.
Though auto sales were depressed, the Fed said it saw "a few indications of an upturn." Bank loan demand was sluggish, even though borrowing costs have retreated.
Housing activity was also weaker than a year earlier, the Fed said, though "commercial and other nonresidential construction is taking up the slack in some areas."
Farmers, meantime, have been "hurt by unfavorable weather and livestock prices," the report said. The tourism industry has also been battered by rain and flooding in some states.
As for inflation, the Fed said: "Labor markets generally remain tight, but little wage pressure is evident. Similarly, price increases for products such as paper and semiconductors have been partially offset by price declines for building materials."