Fed Beige Book shows regional economic activity beginning to stall as COVID cases spiked

 

• A third of the Federal Reserve's 12 districts reported economic activity slowing in early November, while another third saw little or no growth according to the Fed's latest Beige Book report.
• "Philadelphia and three of the four Midwestern Districts observed that activity began to slow in early November as COVID-19 cases surged," the report says.
• "Most Districts reported that firms' outlooks remained positive; however, optimism has waned--many contacts cited concerns over the recent pandemic wave, mandated restrictions (recent and prospective), and the looming expiration dates for unemployment benefits and for moratoriums on evictions and foreclosures."
• There was above-average growth in manufacturing, distribution and logistics, homebuilding, and existing home sales, "although not without disruptions."
• Employment rose in nearly all districts, but the pace was "slow, at best".
• Federal Reserve Chairman Jerome Powell has been on Capitol Hill this week, pushing again for more fiscal stimulus funds. Powell told the House Financial Services Committee today there could be the "light at the end of the tunnel" for the economy around mid-2021.

Some reports from sectors hardest hit by the pandemic:

• Boston: "Many restaurants that used tented spaces to increase social-distanced table capacity this fall reported that heating constraints will shut down those spaces as winter approaches."
• New York: "While tourism is expected to rebound noticeably in 2021, it is projected to remain 25-30 percent below pre-pandemic levels, as the international and business segments are expected to lag."
• Philadelphia: "A hotel contact expects a tough winter for the industry and has already observed more 'jingle mail'—when the operator sends the keys to the lender."
• Atlanta: "Business travel continued to struggle. Based on the current trajectory, a full recovery is not expected until 2023."
• Kansas City: "A majority of contacts in the services sector reported labor shortages, indicating a need for truck drivers and retail, restaurant, and technology staff."