The U.S. economy continued to expand across most of the country, while wage growth was described as varying widely, “from flat to strong,” a Federal Reserve report showed.

Seven of the Fed’s 12 regional districts characterized the economy as growing “moderately,” at a “modest pace” or “slightly,” according to the central bank’s Beige Book, an economic survey published eight times a year.

Reports on manufacturing were mixed, with the sector continuing to suffer as a strengthening dollar and a “weakening global outlook” took a toll on overseas sales.

Members of the Federal Open Market Committee gather in two weeks to discuss their outlook for the economy and set the Fed’s benchmark interest rate. While recent data on jobs, consumer spending and inflation have been mostly positive, concerns about global growth and financial market volatility have reduced expectations for a rate increase this month.

Investors see only a 12 percent probability of a rate hike at the FOMC’s March 15-16 meeting, based on prices in federal funds futures contracts. The committee tightened policy for first time in almost a decade in December, lifting the target range of the fed funds rate to 0.25 percent to 0.5 percent.

The Fed’s survey showed that while wages generally increased since the start of the year, the growth was inconsistent.

David Fuller's view

This also tallies with Roger Bootle’s views, for which I have a high regard.  While these are uncertain times, there is no compelling reason for the US economy to slide into recession.  If the US continues to avoid recession, which it should given the stimulus of cheap oil and gasoline, then Wall Street’s bear market will remain shallow. 

Most commentators focus on weak global GDP growth, which is a concern, but probably not the biggest risk for the US economy which has many advantages, from its technology lead to virtual energy independence should prices rise.

The far greater risk, in my opinion, would be a sustained breakout to the upside by the US Dollar Index.  Only the Fed and US Treasury can prevent this, I maintain, by further surreptitious intervention to keep DXY below 100.

Lastly, other economies which are in recession have experienced greater declines in their stock markets in line with their weakening GDP growth.