Fed survey finds US economy expanding despite trade fallout

FILE - In this Oct. 23, 2019, file photo a worker climbs a ladder as cranes work the construction site for the new corporate headquarters of Norfolk Southern in Atlanta. On Wednesday, Nov. 27, the Federal Reserve releases its latest "Beige Book" survey of economic conditions. (AP Photo/David Goldman, File) (2019 Associated Press. All rights reserved.)

WASHINGTON, DC – The Federal Reserve said Wednesday that the U.S. economy was expanding at a modest pace in October and early November, supported by growing consumer spending.

In its latest assessment of business conditions nationwide, the Fed struck a more upbeat tone than it had in its previous report when it had worried more about trade tensions and slower global growth.

However, it still noted that the majority of the Fed’s 12 districts were not experiencing growth in manufacturing, which has been hurt by a widening trade war with China.

The Fed report, known as the beige book, will be used when Fed officials meet in mid-December to set interest rate policies. The wide expectation is that the central bank will leave its benchmark rate unchanged after cutting it at its three previous meetings.

Those rate cuts, which followed four rate hikes last year, have given a boost to interest-rate sensitive sectors of the economy such as housing and auto sales.

There are hopes that the United States and China will soon reach agreement on a so-called Phase 1 trade agreement that will keep President Donald Trump from imposing a new round of tariffs on Chinese goods.

The U.S. tariffs have provoked retaliation from China which has hurt American manufacturers and farmers, who have seen their markets in China disappear.

The beige book said that more districts than in the previous report said that manufacturing was expanding again, although that number still remained below half of all districts.