Regional Update: Regional Economy Continues to Recover

Southeastern business contacts described economic activity as advancing modestly in the first quarter of the year. A majority of business contacts maintain a positive outlook regarding future economic activity. Contacts continued to express concern over the impact of higher energy costs on consumer confidence and spending.

Businesses express cautious optimism

Most regional merchants reported that retail activity improved in the first quarter. Sales tax data also reflect positive growth in consumer activity--sales tax revenues are up 6 percent year over year for the combined states of the region. The outlook among retail contacts in the Southeast remains optimistic. However, the rising cost of gasoline and its potential effect on consumer confidence and spending were a source of concern. Automobile dealers described robust sales growth and a strong demand outlook. A few contacts noted that an improvement in consumers' access to credit contributed to the increase in sales.

The region is also benefiting from renewed business and leisure travel. Hotel occupancy rates rose on a year-over-year basis in several of the Southeast's major markets, and convention bookings were also improving. …

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