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Beige Book shows slowing economic activity
The Federal Reserve's Beige Book released Wednesday revealed most districts saw modest or moderate economic expansion in economic activity; however, four districts reported little or no growth. Of note, five narratives highlighted that activity remains below pre-pandemic levels for at least some sectors.
“The Fed’s latest roundup of business contacts indicates that economic growth remains positive but has been adversely impacted by the rise in COVID cases," said NAFCU Chief Economist and Vice President of Research Curt Long. "One more dose of fiscal stimulus may be all that’s needed to nurse the recovery along until widespread vaccine distribution, which should unlock a surge in growth.”
The report also indicated numerous districts reported some deterioration of loan portfolios, particularly for commercial lending into the retail and leisure and hospitality sectors. An increase in delinquencies in 2021 is widely anticipated.
Other notable insights from the latest Beige Book include:
- firms' outlooks remained positive; however, optimism has waned, with many contacts citing concerns over the recent pandemic wave, mandated restrictions, and the looming expiration dates for CARES Act-related measures;
- nearly all districts reported a rise in employment, but for most, the pace was slow with recovery remaining incomplete; and
- providing for childcare and virtual schooling needs was widely cited as a significant and growing issue for the workforce, prompting some firms to extend greater accommodations for flexible work schedules.
The Beige Book report – a Fed publication on current economic conditions across the 12 districts – was based on information collected on or before Nov. 20.