US Fed says economy continues to expand despite hurricanes

Economic activity continued to expand in many parts of the United States in September and early October despite of devastating hurricanes Katrina and Rita, the Federal Reserve said Wednesday in its nationwide survey.

"Economic activity continued to expand ... Most districts described the pace of activity as moderate or gradual," said the survey, which is based on information collected before Oct. 11 and supplied from the Fed's 12 regional banks.

The survey provided the latest snapshot of business conditions nationwide in the aftermath of Hurricane Katrina, which slammed into the US Gulf Coast on August 29 and turned out to be the worst natural disaster in US history, and Hurricane Rita, which struck the region on Sept. 24.

Both hurricanes disrupted the nation's oil and gas production, pushing energy prices soaring.

According to the survey, all Fed regions reported rising costs for energy, building materials, shipping and other things. And some of these increased costs are being passed along to consumers in the form of higher retail prices.

The survey, which is called Beige Book and released eight times a year, will be on the table when Fed Chairman Alan Greenspan and his colleagues meet on Nov. 1 to decide whether to raise short- term interest rates once again or not.

Many economists believe the Fed will boost short-term interest rates by another quarter percentage point to 4 percent at the November meeting to fend off an outbreak of inflation.

That would mark the 12th consecutive increase since the central bank began to tighten credit in June 2004, when a key short-term interest rate stood at a 46-year low of one percent.

Source: Xinhua