Weak housing market and unemployment drag on US economy

| July 28, 2011

The latest Beige Book report, published by the Federal Reserve, has revealed widespread signs that US economic growth is slowing.

The Fed said: a�?Economic activity continued to grow; however, the pace has moderated in many districts.”

The economic recovery of the US remains sluggish in the face of higher unemployment and a depressed housing market, the report said.

It said: “Of the Districts reporting on home prices, most said that they were flat or declining”, however, the report noted a pick-up in construction and rental activity.

Meanwhile, the influential report said consumer spending and manufacturing activity increased.

Consumer spending is closely monitored as it accounts for more than two-thirds of the US economy.

The influential Beige Book, which is based on a survey of business views from around the US, is compiled eight times a year and is used to help set interest rates in the worlda�?s largest economy.

Interest rates have stood at the range of zero to 0.25% since December 2008, in an attempt to stimulate growth.

The publication of the report comes at a time when US lawmakers continue tense negotiations to lift the Government debt ceiling and reduce the countrya��s debt burden.

If Congress is unable to raise the debt ceiling by the deadline of 2 August, the US could default on its debt obligations.

Chairman of the Federal Reserve, Ben Bernanke, has previously warned that the US defaulting on its debt would cause a a�?major crisisa�?.

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