Pace of U.S. Recovery Picked Up This Fall, Fed’s Beige Book Says
The U.S. economy’s recovery picked up to a “modest or moderate” pace this fall, while growth began to slow in November in parts of the Midwest and Northeast as coronavirus cases proliferated, a Federal Reserve report said Wednesday.
The Fed’s periodic compilation of anecdotes from business contacts, known as the Beige Book, said the expansion continued in most of the central bank’s 12 districts across the country. But four regional Fed branches reported “little or no growth,” and four noted that activity began to slow in early November.
“Firms’ outlooks remained positive; however, optimism has waned” the report said. “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.”
The Fed’s previous Beige Book report characterized economic growth in the early fall as at a “slight to modest” pace.
Banks reported deterioration in loan portfolios — particularly commercial lending to retail, hospitality and leisure businesses — and expectations of an uptick in delinquencies became more widespread, the Beige Book added.
Wednesday’s report, for which the Fed collected comments on or before Nov. 20, is the latest sign the U.S. and global economic growth could be tempered by the pandemic as winter settles in. The Organization for Economic Cooperation and Development on Tuesday cut its forecast for U.S. economic growth in 2021 to 3.2% from 4%, and its forecasts for the eurozone to 3.6% from 5.1%.
Fed Chairman Jerome Powell on Wednesday described the economic outlook in coming months as challenging, with a brighter outlook that follows.
“Sometime in the middle of next year it really does look like that may be the light at the end of the tunnel — we all hope so — and that the economy could be very healthy,” Mr. Powell said in a congressional hearing. “The problem is people who lose their homes now, or businesses that go out of business. These are sometimes small businesses that have generations of human capital built up in their activities, and once they’re gone they can’t just be recreated.”
Source: Dow Jones