Economy expanding, but at a slower pace

WASHINGTON - The economy lost strength in late summer as factory production weakened in areas of the East Coast and Midwest.

A survey the Federal Reserve released Wednesday found the slower growth spreading to more regions of the country.

The agency said the U.S. economy maintained its expansion while showing "widespread signs of a deceleration" in mid-July through the end of August.

Of the 12 regions tracked by the Fed, activity was mixed or slowed in five - New York, Philadelphia, Richmond, Atlanta, and Chicago. Activity elsewhere was described as modest or pointed to positive developments.

The Cleveland Fed office, which covers all of Ohio, reported that, on balance, economic activity "showed a slight improvement during the past six weeks." Manufacturers reported new orders and production levels were stable, construction rose slightly, and retailers experienced a small rise in sales, the report said.

In the Fed's previous national survey in late July, only two regions - Atlanta and Chicago - had reported slower growth.

Reasons for the soft spots varied.

In New York, retailers, especially those in New York City, said sales dropped. Factory production slowed too. And both the housing and commercial real-estate markets turned even softer.

In Chicago, weaker manufacturing and construction accounted mainly for that region's slower pace. But retail sales rose.

The overall U.S. economy was still growing in late summer, but there were "widespread signs of deceleration," the Fed said.

The findings will figure into discussions when Fed Chairman Ben Bernanke and his colleagues meet next on Sept. 21.