Beige Book: Shutdown Takes Toll on Growth in Some Areas

Nam Y. Huh/AP WASHINGTON -- The Federal Reserve said economic growth slowed in a few key regions of the United States from September through early October, as businesses grew worried about a budget impasse that led to a partial government shutdown. Overall growth continued at a modest to moderate pace, according to the Fed survey released Wednesday. Eight of the Fed's 12 banking districts reported the same growth rate reported in August through early September. But four districts -- Philadelphia, Richmond, Chicago and Kansas City -- reported that growth had slowed. Businesses around the country remained optimistic about the future and consumer spending continued to increase, helped by strong auto sales. But many businesses noted increased uncertainty because of the partial federal shutdown, which began on Oct. 1, and a looming deadline to raise federal borrowing limit. Boston, in particular, reported that the tourism industry was worried about the impact of a prolonged shutdown. And several Districts reported that businesses were cautious about hiring. Senate leaders announced Wednesday that they had an agreement to avert a threatened Treasury default and reopen the government after the 16-day shutdown. The House was likely to approve the measure, too, leading many to anticipate passage in both chambers before the end of the day. The Fed's survey, known as the beige book, will be used by central bank policymakers in their next meeting on Oct. 29-30. Economists believe the Fed maintain its $85-billion-a-month in bond purchases to offset the impact of the shutdown.