Fed keeps stimulus, says taxes, cuts hurt

WASHINGTON - The Federal Reserve cautioned America's political leaders Wednesday that their policies are hurting the economy.

The Fed stood by its aggressive efforts to stimulate the economy and reduce unemployment. But it sent its clearest signal to date that tax increases and spending cuts that kicked in this year are slowing the economy.

The Fed maintained its plan to keep short-term interest rates at record lows at least until unemployment falls to 6.5 percent.

And it said it will continue to buy $85 billion a month in Treasury and mortgage bonds.

The bond purchases are intended to keep long-term borrowing costs down and encourage borrowing and spending.

2 reports indicate growth is slowing

U.S. factory activity expanded at a slower pace in April, held back by weaker hiring and less company stockpiling, the Institute for Supply Management said Wednesday.

Separately, a private survey by payroll processor ADP showed U.S. companies added just 119,000 jobs in April, the fewest in seven months.

Pickup truck sales were strong in April

DETROIT - Ford, GM, Chrysler and Nissan all reported double-digit U.S. sales increases last month, signaling the best April for car and truck sales in six years.

A rebound in pickup truck sales led the way, especially for the Detroit automakers. Small businesses are replacing aging trucks that they've kept since the Great Recession.

Ford's sales increased 18 percent, with the F-Series pickup gaining 24 percent. At Chrysler, sales rose 11 percent, led by the Ram pickup, with a 49 percent sales increase. GM also saw an 11 percent sales jump, with Chevrolet Silverado pickup sales rising 28 percent for the month.

The Associated Press