WASHINGTON -- Most of the country managed decent economic growth in September and early October even amid soaring energy prices from hurricanes Katrina and Rita, the Federal Reserve reported yesterday.
The Fed survey, the latest snapshot of business activity nationwide, is based on information collected before Oct. 11 and supplied by the 12 regional Fed banks. The report will figure into the discussions and decision-making of Fed policy makers at their next meeting on Nov. 1, when it is likely they will continue to raise interest rates.
Katrina ripped through parts of Louisiana, Mississippi, and Alabama in late August, causing widespread destruction. The blow was compounded by Rita, which struck on Sept. 24. Both hurricanes hobbled important oil and gas facilities along the Gulf Coast, pushing energy prices even higher.
Despite that, the Fed survey found that economic activity continued to expand.
Still, the impact from the hurricanes could be seen everywhere. All regions reported rising costs for energy, building materials, shipping and other items.
In New England, the Boston Fed reported that retailers had mixed sales results, with some merchants saying that sales were crimped by high gasoline prices. And the housing market is still mostly oriented to sellers but buyers may be making some inroads. They are making fewer full price offers and negotiating harder.
Many economists believe the Fed will boost short-term interest rates by one-quarter of a percentage point, to 4 percent, at the November meeting to fend off an outbreak of inflation.
In other economic news, housing construction rose in September to the highest level in seven months, temporarily defying expectations of a slowdown in the booming housing market.
The Commerce Department reported construction of new homes and apartments rose 3.4 percent last month to a seasonally adjusted annual rate of 2.11 million units, the fastest pace since last February. Analysts had forecast a decline.