Federal Reserve Says Economy Cooled in June, July

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he Federal Reserve said Wednesday the U.S. economy expanded at a slower rate in June and early July, despite a strong performance from trucking and transportation firms throughout much of the country.

The Fed made the comments in its regular 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 Cleveland Fed and was based on information collected before July 19.

"Several districts reported that the rate of growth moderated," the Fed said. "Reports of rising prices at the producer level continued to be common, though increases in retail prices were only infrequently reported."

The Fed also said labor markets were improving in most districts, while consumer spending "moderated" in seven of the 12.

The Philadelphia Fed said trucking firms reported growing demand for their services, and manufacturers were expecting increases in shipments and orders during the next six months.

The Cleveland, Richmond, San Francisco and Dallas regional banks also said that trucking and shipping firms were continuing to see strong activity. Atlanta said there was strong demand for heavy-duty trucks.

However, the banks in Boston, Chicago and Minneapolis said a shortage of qualified drivers and capacity was holding trucking companies back from additional gains.

The Federal Open Market Committee will use the survey as part of its deliberations on interest rate policy at its meeting Aug. 10, Bloomberg reported. The FOMC is expected to raise the benchmark overnight bank lending rate by 25 basis points to 1.5%, Bloomberg said.