By  on April 27, 2006

WASHINGTON — Economic activity expanded in March and the first half of April, as retail sales rose in most of the U.S., a Federal Reserve report said Wednesday.

Stores continue to keep a wary eye on higher gas prices, which already appear to be biting into the business of discounters, the Fed said in its Beige Book, an anecdotal survey of the central bank's 12 districts. These concerns will likely grow, with a gallon of regular gasoline costing an average of $2.92 Wednesday, up from $2.50 a month ago, according to American Automobile Association.

"A number of districts, including Cleveland, Richmond and Dallas, cite high energy prices as an explanation for weaker-than-expected tourism results, auto sales or retail sales, especially to lower-income consumers," the report said.

Most of the country, however, enjoyed improving retail sales, although stores in the Richmond and Cleveland districts had "sluggish or disappointing results."

Business was described as "mixed" for apparel retailers.

Consumer spending in the Minneapolis district increased moderately, with one mall manager describing traffic as "about even" with a year ago, as sales rose about 2 percent. A mall manager in Montana said apparel and food sales increased compared with the same period a year ago.

However, several mall managers in the Kansas City district reported that traffic declined in recent weeks.

In the Boston area, footwear and accessories sold particularly well, as apparel sales were softer than anticipated, and apparel stores in Maryland and West Virginia, which fall into the Fed's Richmond district, said sales softened.

In Philadelphia, retailers said sales picked up in early April and were expected to keep growing at a higher rate until the traditional summer lag.

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