U.S. Federal Reserve (Fed) said on Wednesday that most areas of the nation saw "slight-to-moderate" economic growth in late January and February, while multiple headwinds and government shutdown weighed on the U.S. economy.
"Manufacturing activity strengthened on balance, but numerous manufacturing contacts conveyed concerns about weakening global demand, higher costs due to tariffs, and ongoing trade policy uncertainty," the Fed said in its latest "Beige Book."
The "Beige Book," a periodic economic snapshot released by the Fed, contained economic report from 12 federal reserve districts, which were each monitored by a regional federal reserve bank.
Along with multiple types of headwinds, government shutdown was another negative factor to have slowed the economy.
"About half of the districts noted that the government shutdown had led to slower economic activity in some sectors including retail, auto sales, tourism, real estate, restaurants, manufacturing, and staffing services," the Fed said.
Speaking of the employment status and price level, two key factors that decide monetary policy, the Fed wrote that "labor markets remained tight for all skill levels," while prices rose at a "modest-to-moderate pace."
Theoretically, the tight labor market and rising price level could urge Fed officials to keep on track to raise short-term interest rates in order to prevent an overheat in the U.S. economy. However, recent remarks made by top Fed policymakers sent out much more dovish signals.
U.S. Federal Reserve Chairman Jerome Powell reiterated on Thursday that the central bank will take a patient approach to further rate increases.
The Fed in January suspended a three-year cycle of rate hikes amid concerns about downside risks. The current target range for the federal funds rate is at 2.25 percent to 2.5 percent. Enditem