Economy Growing Despite Hurricanes, Fed 'Beige Book' Says
espite disruptions caused by Hurricane Katrina, economic activity continued to expand in September, the Federal Reserve reported Wednesday, though the Fed said it may keep boosting interest rates to stave off inflation.
Most districts described the pace of activity as either “moderate” or “gradual,” said the survey, commonly known as the Fed’s “Beige Book.” The report’s analyses and interviews were conducted from late August — Katrina hit near New Orleans on Aug. 29 — through Oct. 11.
The Richmond district reported an increase in the pace of growth, while New York reported a slowdown, the Fed said. Atlanta reported mixed economic conditions, with “significant negative effects on the area economy from [Katrina] damage.”
Philadelphia and Cleveland noted that trucking firms in their districts were having difficulty attracting and retaining drivers.
Philadelphia motor carriers, noting high activity and record fuel costs, said they had raised fuel surcharges to their customers. Expectations of further price increases were widespread, and the number of area firms that have raised, or plan to raise, prices for their own goods and services has increased.
Philadelphia executives said the costs of the goods and services are rising more rapidly than official price measures. One said his firm was developing a cost index to replace the consumer price index for automatic price escalation in long-term contracts, the Fed reported.
Meanwhile, Fed Governor Sandra Pianalto said in a speech that the best policy for the Fed was to continue to raise interest rates gradually, Bloomberg reported Wednesday.
The Beige Book is published eight times a year, about two weeks before the Fed’s next rate meeting. The Federal Reserve Open Market Committee’s next meeting is scheduled for Nov. 1.
