Weak housing market and unemployment drag on US economy

| July 28, 2011
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The latest Beige Book report, published by the Federal Reserve, has revealed widespread signs that US economic growth is slowing.

The Fed said: “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 world‘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 country’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 “major crisis”.

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