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The Journal Gazette

Wednesday, November 30, 2016 10:00 pm

Fed notes slight gains in economy

Staff, news services

WASHINGTON – The Federal Reserve reports that the U.S. economy grew at a modest rate this fall, with solid gains in consumer spending helping offset lingering weakness in exports.

The Fed’s survey of economic conditions around the country found that seven of its 12 districts described growth as modest to moderate. Three other districts – Philadelphia, Cleveland and Kansas City, Missouri – saw a "slight" pace of growth. Richmond, Virginia, viewed activity as mixed, and New York said activity had been flat.

The survey, known as the "Beige Book," will be used when Fed officials meet Dec. 13 and 14. The central bank is expected to raise a key interest rate slightly in response to steady gains in employment and a modest pickup in inflation. The Fed has not raised rates in a year.

A majority of districts reported higher retail sales, especially for clothing and furniture. These gains helped to offset a slowdown in sales of new autos.

Ground broken for RV plants in Goshen

Two days after parent company Thor Industries Inc. reported record quarterly revenues of $1.71 billion, Keystone RV Co. announced it has broken ground on two factories in Goshen.

The Elkhart County manufacturing plants will employ 250 to 300 workers when they are completed early next year, Keystone officials said Wednesday.

The investment is in response to strong customer demand, the company said.

After the total 200,000 square feet of manufacturing space is completed, Keystone will operate 40 factories, including 32 in Indiana. After the new facilities are fully staffed, the company will employ about 5,500, including about 4,800 in Indiana.

Incomes, spending increase in October

U.S. consumers boosted their spending again in October, while their incomes increased at the fastest clip in six months. A key gauge of inflation watched by the Federal Reserve posted the fastest 12-month gain in two years.

Consumer spending increased 0.3 percent in October after a revised 0.7 percent jump in September, the Commerce Department said Wednesday. Incomes increased 0.6 percent, the best showing since April.

An inflation gauge closely followed by the Fed increased 1.4 percent compared with a year ago. That was the fastest 12-month advance since 2014. The rise was below the Fed’s 2 percent target, but with inflation firming.

The inflation gain marked the strongest pace since prices had risen 1.5 percent for the 12 months ending in October 2014.

Eurozone inflation at 30-month high

Food price increases helped push inflation across the 19-country eurozone to its highest rate in 21/2 years, official figures showed Wednesday.

However, the rise in the annual rate to 0.6 percent is unlikely to alter expectations that the European Central Bank will extend its stimulus program next week.

The rise in the November rate as reported by Eurostat, the European Union’s statistics agency, was somewhat of a surprise in markets following lower than anticipated German figures.

Most economists had penciled in an unchanged rate of 0.5 percent.

Inflation in the eurozone is now at its highest since April 2014, when inflation stood at 0.7 percent.

Eurostat said food, alcohol and tobacco had the biggest impact in pushing up prices.