WASHINGTON — The economy lost strength in late summer as factory production weakened in areas of the East Coast and Midwest.
A survey the Federal Reserve released Wednesday found the slower growth spreading to more regions of the country.
Of the 12 regions the Fed tracks, economic activity slowed or was mixed in five: New York; Philadelphia; Richmond, Va.; Atlanta; and Chicago. Activity elsewhere was described as modest or pointed to positive developments.
In the Fed’s previous survey in late July, two regions — Atlanta and Chicago — had reported slower growth.
Reasons for the soft spots varied.
In New York, retailers said sales dropped. Factory production slowed too. And the housing and commercial-real-estate markets turned even softer.
Philadelphia reported slower manufacturing and real-estate activity. But retailers’ revenue rose, which explained that region’s mixed picture.
The Fed survey also found that five regions — St. Louis, Minneapolis, Kansas City, Dallas and San Francisco — reported modest growth. And two regions — Boston and Cleveland — reported improved economic activity.
All that helps explain why Thomas Hoenig, president of the Federal Reserve Bank of Kansas City, voted against the Fed’s relief action in August. He says he thinks the national economy will keep growing and get through any soft patches without any extra help from the Fed.
The overall U.S. economy was still growing in late summer, but there were “widespread signs of deceleration,” the Fed said.
The findings will figure into discussions when Fed Chairman Ben Bernanke and his colleagues meet Sept. 21. The Fed is sure to keep rates at record lows to bolster the economy.
“Bottom line: The Fed . . . was surprisingly frank in describing an economy that is in the process of losing momentum,” said Brian Bethune, economist at IHS Global Insight.
He said pressure is mounting on the Fed to take more action to help.
“The ailing economy needs more oxygen pumped into it in order to nurse it through a critical phase of the recovery,” Beth une said.
