WASHINGTON—The Federal Reserve's latest Beige Book data reveal that almost all districts saw a rebound in economic activity – but remained well below pre-coronavirus pandemic levels – as more non-essential businesses were allowed to reopen.
Reopening also supported increased employment on net; however, payrolls remained low and job turnover rates were high with new layoffs across the districts.
"Conditions are changing quickly and the Fed’s latest survey of business contacts already feels somewhat stale," said Curt Long, NAFCU's chief economist and vice president of research. The Beige Book report was based on information collected on or before July 6.
Optimism Gives Way
"Last month’s optimism as businesses were reopening has since given way to concerns over reinforced shutdowns, announced delays in school openings, and growing consumer fears. A smooth path back to normal was never likely, but it will still leave consumers and businesses more cautious until a vaccine is ready and widely available," Long added.
The Beige Book pointed to difficulties in bringing back workers due to "health and safety concerns, childcare needs, and generous unemployment insurance benefits." Businesses that had received a loan through the Paycheck Protection Program (PPP) to retain workers indicated "the strength of demand would determine whether they can avoid layoffs."
Other Economic Notes
The Beige Book also noted:
- Retail sales rose in all districts, led by a rebound in vehicle sales and sustained growth in the food and beverage and home improvement sectors
- Leisure and hospitality spending improved, but was far below year-ago levels
- Home sales increased moderately, but commercial real estate activity stayed at a low level
- Loan demand was flat outside of some PPP activity and increased residential mortgages
- When selling prices changed, decreases outnumbered increases, as contacts in several districts cited weak demand and limited pricing power; however, one exception noted by multiple districts was new and used vehicle prices, which were boosted by low inventories