beige book publication notes marginal early summer economic gains

The effects of the COVID-19 shutdown have taken their toll not only on business conditions in general, but attitudes about business conditions, says the latest edition of the Federal Reserve System’s Beige Book.

The publication, which looks at the most current economic trends across a dozen Federal Reserve Districts, notes that economic activity in nearly all of those districts has been on the upside since early spring.

But, says the publication, that activity remains “well below where it was prior to the COVID-19 pandemic.”

Noting that spending in the consumer goods, food and beverages, vehicle sales, and home improvement sectors was generally up in the last three months, the Beige Book also records that a demand for “professional and business services increased in most Districts, but was still weak.”

The publication adds: “Transportation activity rose overall on higher truck and air cargo volumes” while “construction remained subdued, but picked up in some Districts.”

Appraising the Kansas City District, which includes Colorado and northern New Mexico, the Beige Book remarks that even though sources interviewed in the district “expected additional gains in the months ahead,” real estate was in decline, while “the energy and agricultural sectors remained a drag on the regional economy.”

The Dallas District, taking in all of Texas and southern New Mexico, saw the same downward trend in oil and gas production, as “drilling activity fell to new lows and loan demand contracted further.”

At the same time, manufacturing and service sector activity in the Dallas district saw an increase, although interviewees in the District also indicated that “the upward trend in new COVID-19 cases has increased uncertainty.”

In the San Francisco District, which includes all of Arizona, employment levels have slightly increased, as have the sale of retail goods. “Residential construction activity picked up somewhat, while the commercial side was mixed,” adds the report.

Although economic conditions nationally were generally improved in early summer over early spring, a return to a pre-COVID-19 employment picture may for the short term prove problematic.

“Contacts in nearly every District noted difficulty in bringing back workers because of health and safety concerns, childcare needs, and generous unemployment insurance benefits.”
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Continued the publication:  “Businesses who have kept their doors open and maintained staffing levels due to the support of the Paycheck Protection Program said that in going forward “the strength of demand would determine whether they can avoid layoffs.”

​By Garry Boulard

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