The US economy was expanding nicely before Hurricane Katrina hit the Gulf Coast on Aug. 29, the Federal Reserve (Fed) said Wednesday in its nationwide survey of business conditions.

Before the storm, "except for energy, overall consumer price increases were modest" over the past two months, according to the survey, which is based on information collected before Aug. 29 and compiled with reports from its 12 regional banks.

The survey found that manufacturing activity rose in most of the Fed's 12 regional districts before the storm slammed into the Gulf Coast. Retail sales and tourism activity strengthened in most regions and the jobs climate improved.

As for the country's red-hot housing market, the survey found that it showed some signs of softening in some regions.

Kansas City, New York, Philadelphia and Richmond observed strong home sales, the Fed said, "but signs of cooling were evident." Some areas reported that residential construction activity was brisk but down from a year ago.

Hurricane Katrina will trim US economic growth by as much as a full percentage point in the second half of this year, according to a report by the Congressional Budget Office (CBO) on Wednesday.

The CBO also predicted that a total of 400,000 jobs losses through the end of this year.

Source: Xinhua