The U.S. economy expanded at a "measured pace" in recent weeks as gains in consumer demand and housing were tempered by a slowdown in manufacturing and the impact of Superstorm Sandy, the Federal Reserve said in its "beige book" survey.
"Consumer spending grew at a moderate pace in most districts, while manufacturing weakened," the central bank said in the survey that comes out eight times a year and is based on reports from the Fed's 12 district banks.
"Contacts in a number of districts expressed concern and uncertainty about the federal budget, especially the fiscal cliff."
The report indicated that Fed policymakers were unlikely to curtail monthly purchases of $40 billion in housing debt to boost the three-year economic expansion. It also bolstered Fed Chairman Ben S. Bernanke's view that an agreement on reducing long-term federal budget deficits without abrupt tax increases and spending cuts would remove a barrier to growth.
In its prior report, the Fed said that "economic activity generally expanded modestly."
The Fed said seven of 12 districts reported "either slowing or outright contraction in manufacturing" as some contacts "expressed concern about the outlook for 2013, in part, due to the uncertainty regarding the outcome of the fiscal cliff."
Economic activity in the 12th District, which includes California, expanded at a modest pace during the reporting period of October through mid-November, the report said. "Price inflation for final goods and services was subdued overall, and upward wage pressures were quite limited.
"Sales of retail items and most business and consumer services rose further on net, and contacts noted expectations for sales growth during the holiday retail season."
The survey also said that in the district, "housing demand continued to firm, and conditions were largely stable for commercial real estate. Contacts from financial institutions reported that overall loan demand was largely unchanged, while credit quality improved."