“Reports from the 12 Fed districts suggest overall economic activity expanded at a moderate pace,” the report read – but consumer spending was reined in by the impact of payroll and income tax hikes, as well as cold weather and high petrol prices.
Housing was particularly strong, the Fed research showed, with extra building in all districts barring Philadelphia. This lifted manufacturers in related industries, as well as directly boosting construction, the Fed said.
But outside of residential construction, labour market conditions were broadly flat, according to the Fed data, with several districts pointing to uncertainty surrounding political wrangling – particularly over healthcare reform and federal fiscal policy.
Some responses worried that the defence industry – hit by the so-called sequester that cut spending by approximately $85bn (£55.8bn) at the beginning of March – was set for decline.
However, other Fed districts said defence firms were responding by ironing out supply chain inefficiencies, rather than cutting down on overall business activity.