Fed: Economic recovery slow and uneven

‘Beige Book’ survey highlights uncertainty

The US economy continued to grow across the country as it recovered from the coronavirus pandemic but the picture was uneven, according to a new report from the Federal Reserve.

“Changes in activity varied greatly by sector,” the central bank said in its Beige Book survey released in Washington on Wednesday.

“Economic activity continued to increase across all districts, with the pace of growth characterised as slight to modest in most districts.”

The report was based on information collected by the Fed’s 12 regional banks through Oct 9.

“Districts characterised the outlooks of contacts as generally optimistic or positive, but with a considerable degree of uncertainty,” the Beige Book noted.

All told, the word “uncertainty” appeared 20 times in the report.

The US economy’s rebound has shown some signs of slowing in recent weeks as fiscal stimulus passed in early spring has expired and Covid-19 makes an autumn resurgence. The most recent economic data has been mixed, with consumer spending rising while jobs gains have slowed.

The report was released in advance of the Federal Open Market Committee’s meeting Nov 4-5, which starts the day after the US election. Economists expect the central bank to make few if any changes to policy.

The chance that lawmakers in Washington will agree on a new round of spending remains in the balance. The White House has boosted its fiscal-stimulus offer in negotiations with Democrats, and House Speaker Nancy Pelosi said she’s hopeful for a deal.

While manufacturing activity increased and home sales saw steady demand, some districts reported that retail sales had leveled off and conditions in commercial real estate deteriorated in may places, with the exception of warehouse and industrial space.

Restaurants — many of whom have been able to stay afloat by offering outdoor dining — were worried about the looming cooler weather slowing sales. Banks voiced concern about the prospect of rising delinquency rates in coming months, though they’ve so far been stable.

Employment increased but growth remained slow, with the labor market seen as tight by hiring firms, which they blamed on workers’ health and childcare concerns, and the outlook cloudy.

“With the pandemic ongoing and the stimulus ended, uncertainty remained extremely high in anticipation of layoffs, foreclosures, and bankruptcies,” the Philadelphia Fed reported.

The Boston Fed called uncertainty “the watchword.”

The election also surfaced as a source of doubt from the accounts of some regional Fed banks, including Dallas and Richmond.

Several districts reported robust activity in the construction sector amid increased real-estate market activity, driving up wages as demand for workers increased. The price of building materials rose and lumber was often hard to come by.