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Wednesday, 8 December, 1999, 21:58 GMT
Reassuring signs on US economy
A very merry Christmas for the US economy


The US economy continues to grow strongly with little sign of inflationary pressure, according to the latest report from the US central bank, the Federal Reserve.

The Beige Bank, a compilation of reports from the Fed's regional offices, says that the economy at a moderate-to-strong pace in October and November while labour markets remained tight with few signs of accelerating inflation.

Wage costs - the most closely watched indicator by the central bank - were still moderate.

"The pace of wage and salary increases did not appear to be accelerating generally, although there were some reports of larger recent salary increases in some industries and regions," the report said.

And the Beige Book said that there was little sign of inflation.

Prices at the retail level appeared to be nearly steady, adding that consumer spending had picked up over the Thanksgiving weekend, at the end of November, after being hampered by warm weather earlier in the month.

"Retailers expressed confidence that the brisker pace of sales will continue throughout the holiday shopping period," it added.

Key decision

The data will influence central bank when it meets on December 21 to decide whether to raise interest rates.

The Fed has raised rates three times this year in an attempt to cool the booming US economy.

But recent figures suggest that it still growing by more than 5% annually.

And business economists - who forecast trends for big companies - are also increasingly optimistic about the US economy.

A survey showed that they now expect it to grow by 3.2% next year, as opposed to an earlier forecast of 2.7%.

Inflation was expected to remain at a moderate 2.5%, up from 2.3% suggested earlier.

"The macroeconomic forecasts of the panelists reveal a more optimistic outlook for economic growth in the new year than was evident in the last survey, though panelists still expect an economic slowdown," said Mike Englund, an economist from Standard Poor's who helped compile the survey.

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See also:
03 Dec 99 |  Business
US job growth continues
05 Nov 99 |  The Economy
US wages steady despite jobs record
15 Nov 99 |  The Economy
US Fed raises rates
12 Nov 99 |  The Economy
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24 Nov 99 |  Business
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