Fed Says Economy Expanded Modestly in February, March

The U.S. economy kept growing moderately in the late winter months but rising prices for gasoline and other energy products were beginning to worry producers and consumers across the country, the Federal Reserve said on Wednesday.

"Reports from the 12 Federal Reserve districts indicated that the economy continued to expand at a modest to moderate pace from mid-February through late March," the central bank said in its latest "Beige Book" summary of national activity.

It found several hopeful signs for growth, including steady hiring and shortages of skilled workers as well as brisk new-vehicle sales and improving residential real estate markets but with a strong dose of concern about energy costs.

"Manufacturers in many districts expressed optimism about near-term growth prospects, but they are somewhat concerned about rising petroleum prices," the Fed said.

Similarly, while immediate prospects for consumer spending were seen as bright, "contacts in several districts expressed concerns that rising gas prices could limit discretionary spending in the months to come."

The Beige Book, prepared this time by the Cleveland Fed based on information collected by April 2, has market interest because it is based on anecdotal reports from business people from coast to coast and thus reflects real-life conditions.