Fed reports weak consumer spending

The U.S. economy’s current “soft patch” extended into early January, the Federal Reserve said in a report Wednesday, as consumers kept a tight grip on their wallets over the holiday season.

“Most districts characterized growth as ‘sluggish,’ or economic activity as ‘soft’ or ‘subdued,’” the Fed said in its periodic “beige book” report, an anecdotal roundup of U.S. economic conditions compiled from reports submitted by its 12 regional banks.

“Reports on consumer spending were consistently weak, with disappointing holiday sales that, in nominal terms, mostly were at or below last year’s levels,” the Fed said.

Auto sales, however, “surged,” the central bank said, in year-end gains attributed to sales incentives.

Fed policymakers will take the beige book into consideration at their upcoming Federal Open Market Committee meeting slated for Jan. 28-Jan. 29.

With short-term interest rates already at their lowest levels in about four decades, the central bank is widely expected to refrain from changing them.