Fed Says Economy Continues to Expand

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he economy continued to expand from late November through early January, with most of the 12 Federal Reserve districts reporting an increase in consumer spending and only "modest" inflation pressures.

The Fed made the comments in its regular survey and report on economic activity known as the "Beige Book."

The report is released eight times a year from information compiled by each of the Fed's 12 district banks. This report was prepared by the Richmond Fed and was based on information collected before Jan. 10.

Overall, 11 districts said activity was expanding, with Atlanta, New York, and Richmond noting that the pace of activity had quickened since their last reports.

The Fed said the Cleveland district was less upbeat, characterizing economic as "mixed." However, Cleveland also said the demand for trucking and shipping services remained strong, with several contacts calling conditions "surprisingly strong."

Cleveland also reported that companies were adding to capacity through new truck purchases and using fuel surcharges to protect them against any adverse fluctuations in fuel expenses.

Meanwhile, Boston, Atlanta and Dallas each said demand for trucking services was strong over the past six weeks, with some firms struggling to find qualified drivers. In addition, they said ports and railroads were seeing strong demand and rising prices.

The Fed report also noted that a contact in the Chicago area said "the window to replace the fleet before the 2007 change in environmental regulations is closing," with order books already filled for the first half of 2005.

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