US economy expands, labor market soft: Fed

WASHINGTON — The US economy continued to expand modestly on the back of consumer spending but the labor market remained bleak, the Federal Reserve said in its Beige Book report Wednesday.The report, to be used by members of the central bank's policy-making body on March 16, said data from the 12 Federal Reserve districts indicated that "economic conditions continued to expand" although severe snowstorms in early February "held back activity" in several areas.Consumer spending, a critical component of the US economy, "improved slightly" in many districts since the last survey, the Fed report said.Among sectors that saw improvement was services, which accounts for more than two-thirds of US economic activity, and manufacturing.The report said demand for services was "generally positive across districts," most notably for health-care and information technology firms, while manufacturing activity "strengthened in most regions," particularly in the high-tech equipment, automobile, and metal industries.The report pointed out that the jobless situation, which the government and private economists fear could dampen recovery, remained bleak."Although some districts reported an uptick in hiring or a slowdown in layoffs, labor markets generally remained soft throughout the nation, which resulted in minimal wage pressures," the report said.The US economy expanded in the final two quarters of 2009 after a year of contraction following a financial crisis stemming from a home mortgage meltdown.The Fed report said nine of the 12 districts reported that economic activity improved but "in most cases the increases were modest."In two districts -- Atlanta, Georgia, and St. Louis, Missouri -- overall conditions were "mixed" while in Richmond, Virginia, economic activity slackened or remained soft across most sectors due mostly to severe weather conditions.The Fed said tourist activity increased or was mixed, with some improvement in hotel occupancies.On the housing market, the epicenter of the financial crisis, the central ba

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