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Beige Book: Economic activity up in most districts but below pre-pandemic levels

Written by Jasir Jawaid

The Federal Reserve's latest Beige Book found that economic activity increased in almost all districts but remained "well below" pre-coronavirus levels.


Consumer spending inched upward as many nonessential businesses were allowed to reopen. Leisure and hospitality spending improved but was "far below" year-ago levels. Every district reported an increase in retail sales thanks to a rebound in vehicle sales and sustained growth in the food and beverage and home improvement sectors.


Most districts witnessed an increase in manufacturing activity but "from a very low level." While construction remained "subdued" overall, it picked up in some districts. Home sales increased moderately, but commercial real estate activity stayed at a low level.


Loan demand was flat outside of some Paycheck Protection Program activity and increased residential mortgages. Financial conditions in the agriculture sector remained "poor," while energy sector activity fell further amid limited demand and oversupply.


"Outlooks remained highly uncertain, as contacts grappled with how long the COVID-19 pandemic would continue and the magnitude of its economic implications," the report said.


While almost all districts posted a net gain in employment, payrolls in all districts were "well below" where they were prior to the pandemic. Job turnover rates remained high, with contacts across districts reporting new layoffs.


"Contacts in nearly every District noted difficulty in bringing back workers because of health and safety concerns, childcare needs, and generous unemployment insurance benefits," according to the report.


Prices were little changed overall, and contacts across districts "largely reported" both input and selling prices were flat.


This article was published by S&P Global Market Intelligence on the S&P Capital IQ Pro platform.

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