The Federal Reserve on Wednesday confirmed that the US economy is slowing, justifying the central bank's recent move to announce a fresh round of quantitative easing to shore up growth.
The Fed's Beige Book, a snapshot of economic conditions across the central bank's 12 districts, suggested that the US economy continued to grow between mid-July and the end of August, but with "widespread signs of a deceleration".
In its survey by 12 regional banks, the Fed reported that conditions were mixed or decelerating in five regions and growing at a moderate pace in five regions.
"Economic growth at a modest pace was the most common characterization of overall conditions," said the report.
Also on Wednesday, new evidence pointed to American consumers continuing to reduce their indebtedness, though at a slower pace than forecast.
Consumer credit declined by US$3.6bn in July, the Fed said, compared with the US$4.7bn decline analysts had forecast. The drop was steepest in revolving debt, suggesting that people were paying down their credit card bills.
According to the beige book, consumer spending seems to be rising slowly.
Most Fed districts reported that retail sales excluding automobiles rose, but the Atlanta Fed reported a decline in the level of sales, and Richmond noted that sales sputtered in August.
New York and Dallas reported that growth in retail sales slowed.
Spending on big-ticket items such as consumer electronics was weak, according to Fed banks in Philadelphia, Richmond and Dallas, and most districts reported that auto sales were largely stable or up.
Meanwhile, manufacturing activity expanded further on balance, although the pace of growth appeared to be slower than earlier in the year.
Fed policymakers use the Beige Book report to help decide the course of monetary policy, and it is released in advance of their policymaking meetings.
The Federal Open Market Committee is scheduled to meet Sept. 21. Fed officials are expected to leave their interest rate target near zero and will probably consider new unconventional efforts to bolster a sluggish economy.
Overall economic activity, as measured by GDP, rose at a 1.6% annual rate in the April-through-June quarter. Forecasts for the third quarter, which ends this month, are not any better.