WASHINGTON
The economy lost strength in late summer as factory production weakened in areas of the East Coast and Midwest.
The Federal Reserve released a survey yesterday that found the slower growth spreading to more regions of the country.
Of the 12 regions the Fed tracks, economic activity slowed or was mixed in five -- New York, Philadelphia, Richmond, Atlanta and Chicago. Activity elsewhere was described as modest or pointed to positive developments.
In the Fed's previous survey in late July, only two regions -- Atlanta and Chicago -- had reported slower growth.
Reasons for the soft spots varied. In New York, retailers, especially those in New York City, said that sales dropped. Factory production slowed, too. And both the housing and commercial real-estate markets turned even softer.
In the Richmond region, which includes North Carolina, retail sales sputtered, some factories reported a slowdown in customer demand, and real-estate markets remained soft. A similar trend was reported in Atlanta, where retail, manufacturing and real-estate activity all fell.
In Chicago, a weakening in manufacturing and construction activity accounted mainly for that region's slower economic pace. Retail sales in that region rose, however.
The overall U.S. economy was still growing in late summer, but there were "widespread signs of deceleration," the Fed said.
The findings will figure into discussions when Fed Chairman Ben Bernanke and his colleagues meet next on Sept. 21. The Fed is sure to keep rates at record lows to bolster the economy. Bernanke has said the Fed is prepared to take additional steps -- namely buying large amounts of government securities -- if the economy seriously deteriorated. That would be aimed at driving down rates on mortgages and other loans to spur Americans to buy more and strengthen the economy.
"Bottom line: The Fed ... was surprisingly frank in describing an economy that is in the process of losing momentum," said Brian Bethune, an economist at IHS Global Insight. He said that pressure is mounting on the Fed to take more action to help. "The ailing economy needs more oxygen pumped into it in order to nurse it through a critical phase of the recovery," Bethune said.
The Fed survey also found that five regions -- St. Louis, Minneapolis, Kansas City, Dallas and San Francisco all reported modest growth. And two regions -- Boston and Cleveland -- reported improved economic activity.
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