In the periodic Beige Book of regional economic reports, the Fed said that the U.S. economy expanded at a modest to moderate pace in July through mid-August, but that signs of an acceleration in inflation remained slight. While consumer spending increased in most districts, there are also many signs of worry about a prolonged slowdown in the auto industry.
In Cleveland, year-to-date production at auto assembly plants declined more than 16 percent when compared with the same period a year ago, although much of decline was due to retooling. Slowing demand for autos has led some of the Fed's reporters to temper their outlook for the economy in coming months. In Chicago, one contact noticed auto suppliers no longer are searching for space to build new factories.
Vehicle sales in August slumped to the worst rate in more than three years. After a multiyear auto expansion, there are mounting signs that American car buyers are beginning to lose interest.
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