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slightly in most districts. Manufacturing activity was mixed, with half of the districts reporting slight improvement since the previous Fed report. And hiring was unchanged in most districts.
• Sal Gauatieri, senior economist at BMO Capital Markets, said the August report represents a subtle shift in the central bank's outlook. The economy improved to growing "modestly," he noted, from growing only "gradually" in the previous report.
• The Beige Book provides anecdotal information on business conditions around the country. The information collected by the Fed's 12 regional banks will be used as the basis for the Fed's policy discussion at the Oct. 23-24 meeting.
• Economists expect no major moves at the meeting because the Fed adopted aggressive new policies in September.
• The Fed is buying mortgage bonds to lower longer-term rates, which could spur more borrowing and spending. And the Fed plans to keep short-term interest rates near zero until at least mid-2015, even after the recovery shows signs of strengthening.
• By making borrowing cheaper, the Fed hopes to fuel the modest housing recovery. When home prices rise, people tend to feel wealthier and spend more freely. Consumer spending drives nearly 70 percent of economic activity.
• The Fed report noted that oil production hit a record high in South Dakota, while the Minneapolis, Kansas City and Dallas districts also saw robust gains in energy production. The Atlanta and Richmond districts reported record levels for port activity in their regions.
• The drought continued to weigh on farm activity in the Chicago, Minneapolis, Kansas City and Dallas districts. Dallas and Chicago reported that recent rains had improved the outlook in those districts.
• Businesses remain cautious about investing and hiring. Many are worried that Congress will stay deadlocked on a budget deal and the economy will go over a "fiscal cliff." If that happens, a combination of tax increases and spending cuts would kick in in January that could send the country back into a recession.
• Consumers have also been cautious this year, which has contributed to slower growth. The economy grew at a lackluster 1.3 percent annual rate in the April-June quarter, down from the 2 percent rate in the first three months of the year.
• Economists expect growth to hover near 2 percent for the rest of the year. That's typically too weak to create enough jobs to rapidly bring relief to more than 12 million unemployed Americans.
• The job market is looking a little better. The unemployment rate fell last month to 7.8 percent, down from 8.1 percent in August. It was the first time in more than 3 ½

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