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The Fed's Beige Book of regional economic conditions, released Wednesday, indicates that the economy expanded in June and early July as strength in the manufacturing and commercial real estate sectors compensated for continuing sluggishness in the housing sector. Consumer spending rose at a "modest pace," constrained by high food and energy prices, and sales were "mixed or below expectations" in several districts. Kansas City and Dallas posted slowing growth and Boston and Atlanta reported mixed conditions. Housing related sales, including furniture and DIY materials, were weak. Last week, Fed Chair Ben Bernanke told a Congressional hearing the housing slowdown could rein in economic growth, but reiterated that the Fed's primary concern is inflation. In related news, New York Fed President Timothy Geithner said Wednesday the economy is "performing well" and defaults on commercial and industrial loans are "extremely low." "Overall, the U.S. economy continues to display remarkable resilience and flexibility, despite a range of adverse shocks," he said. The Fed will next meet to decide monetary policy on August 7.

Sources: The Federal Reserve Board Beige Book, New York Times, KTRE.com, MarketWatch, Bloomberg, Reuters
Commentary: Bernanke Foresees Cooling Inflation, Stronger GrowthSlow Housing Stats, Continued Rebound In ManufacturingWhy is the Fed So Indecisive?
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Source: Fed: U.S. Economy Expanding Moderately