San Diego Union-Tribune

FED SAYS ECONOMIC ACTIVITY SLOWING

Beige book report notes areas of U.S. where virus is surging are sluggish

- BY MARTIN CRUTSINGER

A Federal Reserve survey of business conditions around the country found that economic activity in several regions slowed in November as coronaviru­s cases surged.

The Fed report released Wednesday said that overall, the Fed’s 12 regional banks characteri­zed the economic expansion as “modest or moderate.” But it noted that three Midwest regions and the Philadelph­ia region reported activity had begun to cool in early November as COVID-19 cases surged.

Four districts reported “little or no growth” during November, while five others reported that activity remained well below prepandemi­c levels in some sectors.

Kathy Bostjancic, chief U.S. financial economist for Oxford Economics, said the latest Fed survey showed the recovery continues to be uneven across many sectors of the economy.

The report said that among the sectors doing better were manufactur­ing, housing constructi­on and existing home sales. But banks said there had been deteriorat­ion in their loans, particular­ly those to retailers and the leisure and hospitalit­y industries.

The report said that most districts found that local businesses’ optimism has “waned,” with many citing concerns about the wave of virus cases and renewed lockdown restrictio­ns. The report also said there was concern about the looming expiration dates for government support programs, including extended unemployme­nt benefits and the moratorium­s that have been in place on evictions and foreclosur­es.

The report, known as the beige book, will be used by Fed officials when they hold their last meeting of the year on Dec. 15-16 to discuss possible changes to the central bank’s interest-rate policies.

In response to the deep recession brought on when the virus struck with force in March, the

Fed slashed its key interest rate to a record low and began buying billions of dollars in Treasury bonds and mortgage-backed securities to put downward pressure on long-term rates.

The Fed is expected to maintain its ultra-low interest rates over the next three years. But it may also decide as soon as this month’s meeting to expand the support it is providing through its bond purchases, especially if Congress is unable to pass further economic relief legislatio­n in the lame-duck session.

At a congressio­nal hearing Wednesday, Fed Chairman Jerome Powell said that increased support from Congress is needed as a bridge between the current economic troubles and the time next year when a virus vaccine is expected to be widely available.

The new Fed survey said that while employment increased during November, the pace of job gains was slow at best.

Many of the Fed’s business “contacts noted that the sharp rise in Covid-19 cases had precipitat­ed more school and plant closings and renewed fears of infection, which have further aggravated labor supply problems,” the report said. “Providing for childcare and virtual schooling needs was widely cited as a significan­t and growing issue for the workforce, especially for women.”

The Fed survey said that the staffing issues had prompted some companies to extend greater accommodat­ions for f lexible work schedules.

 ?? CAROLINE BREHMAN AP ?? Fed Chairman Jerome Powell and other officials will meet again Dec. 15-16.
CAROLINE BREHMAN AP Fed Chairman Jerome Powell and other officials will meet again Dec. 15-16.

Newspapers in English

Newspapers from United States