Fed: Economy still growing, but gas price problems loom

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On the jobs front, the Fed reported that hiring was steady or picking up slightly in several areas across the country, as businesses continue searching for highly skilled workers for certain positions. 

The latest edition of the beige book, released Wednesday, was based on data gathered before the Labor Department released its disappointing March jobs report. The economy added just 120,000 jobs that month, well below gains in the previous month and expectations, which were above 200,000, driving fresh concern that the economy recovery might be lacking momentum.

While business contacts continued their theme of cautious optimism in talking to the Fed, growing concern over climbing gas prices was pervasive throughout the Fed's release. Retailers credited "unusually warm weather" as a boost to business recently, but several contacts were worried that gas prices could end up limiting the amount people were willing to spend in the coming months. In particular, contacts in Atlanta, Boston and Missouri's Kansas City and St. Louis were fretting about the mounting cost of fuel.

Furthermore, manufacturers in several locations cited gas prices as dampening their optimism for business in the near future. And some contacts in the tourism industry similarly worried that hefty prices at the pump could reduce leisure travel going forward. 

In Richmond, Va., fuel prices were a "serious problem" for both land and ocean shippers, and airlines were hiking fares in Minneapolis and Dallas to offset those costs.

But climbing gas prices were also cited by some as a reason for a boost in the sale of fuel-efficient vehicles.

On the housing front, most districts reported improving conditions, especially in the area of multifamily housing, as many areas said new apartment construction was on the rise. The warm weather also was a boon for real estate activity, as potential homebuyers started their search earlier. However, contacts in Boston, New York and Minneapolis all reported that home prices were still falling, and those in San Francisco said its prices were largely flat.