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The Honolulu Advertiser

Posted at 11:01 a.m., Wednesday, July 30, 2003

Fed poll finds economic growth

By Jeannine Aversa
Associated Press

WASHINGTON — America’s economy, which has been poking along, displayed fresh signs of gaining a bit of momentum in June and the first half of July, the Federal Reserve said today in its latest snapshot of business activity nationwide.

Most of the Federal Reserve’s 12 districts that were surveyed suggested they were experiencing stronger growth.

“Consistent with the generally more positive assessments of current economic activity, several districts noted increased optimism about economic prospects in coming months,” the Fed’s report said.

The Fed’s San Francisco district noted that while tourism remained sluggish in most Western states, Hawai‘i’s tourism sector picked up sharply, despite low foreign visitor traffic.

The residential real estate market, helped by low mortgage rates, was one of the strongest sectors in the Western states.

“Home sales, home prices and new home construction all continued at a rapid pace in most areas, particularly in Hawai‘i and parts of Southern California,” according to the San Francisco district’s report.

While the nation generally recorded improvement, there were a few exceptions. Two districts besides San Francisco — Chicago and St. Louis — characterized economic activity as sluggish, while Atlanta described business conditions as mixed, the Fed said.

The national survey of business conditions, known as the beige book for the color of its cover, will be used by Fed policy-makers when they meet Aug. 12 to set interest rates.

The survey suggested that the economy flashed more signs of life since April and May, the period covered in the Fed’s previous survey.

Although the Fed’s last survey hinted that the economy was on the verge on a revival, the Fed decided to give the recovery a little push. Fed policy-makers on June 25 cut a key interest rate by one-quarter point to 1 percent, a 45-year low.

Fed Chairman Alan Greenspan and private economists believe the economic growth, which has been limping along, will pick up speed in the second half of this year. President Bush’s tax cuts along with near rock-bottom short-term interest rates should help out on that front, economists say.