Economic growth has picked up somewhat in most parts of the country in recent weeks as coronavirus infections decline and vaccines spread more widely, according to the Federal Reserve’s latest collection of anecdotes from its 12 districts.
The beige-book report, prepared on the basis of information gathered by regional Fed banks on or before February 22, tells the story of a country slowly emerging from the pandemic, but with mixed consumer spending and lingering effects of restrictions of Covid-19 on crowds.
On the employment front, most districts said employment levels had increased, albeit slowly. And many reported difficulties attracting and retaining skilled workers, with severe labor shortages in low-skilled occupations and skilled trades. Salaries and hiring are expected to increase over the next few months.
“The tone of the description of the economy shows that economic activity has stabilized and started to improve again. The surge in Covid cases that began last fall has significantly weakened the recovery, but now it looks like the worst days are behind us, ”wrote Jefferies economists Thomas Simons and Aneta Markowska.
Here’s a sample of slightly edited snippets from Fed districts across the country:
Boston tourismAll Boston area conventions originally scheduled for summer 2021 have been postponed. Hospitality contacts said restaurant sales and hotel stays fell further during the winter months amid the further surge in Covid-19 cases. Nonetheless, the same contacts were optimistic for the first time since the start of the pandemic, as they expected more widespread vaccine distribution and warmer weather to lead to a release of pent-up demand in the spring and summer. .
Living in New YorkThe New York City co-op and condominium market has grown significantly in volume terms, but with prices 5-10% lower than the previous year’s levels as inventories remain high. The biggest price drops and the strongest activity occurred at the high end of the market. New York City’s residential rental market continued to slow, with rents down 10-15% from last year in Brooklyn and 20-25% in Manhattan and Queens. Rental vacancy rates in New York City are said to be at multi-decade highs.
Minimum Wage in PhiladelphiaWages recovered modestly, after maintaining a slight pace of growth since mid-summer. The percentage of non-manufacturing companies reporting higher wage costs and benefits per employee widened to almost a third. Just over half of the companies reported no change. Staffing firms reported that wages were increasing across the salary spectrum. While several contacts worry about a possible increase in the minimum wage, one contact said wages were increasing due to demand for labor – “the $ 15 minimum is already there.” Another pointed to jobs offering $ 23 an hour for warehouse jobs.
Consumers in ClevelandThe lifting of government restrictions on opening hours has somewhat improved the business activity of restaurateurs. Sales at general merchants and clothing retailers have been slightly better recently, although some noted that in-store sales have remained weak. Auto dealers said low inventories were limiting sales, while hoteliers said the lack of business travel continued to delay the industry’s recovery. Contacts were cautiously optimistic that consumer spending will continue to pick up over the next few months thanks to additional fiscal stimulus and the apparent decline in coronavirus infections.
Retail in RichmondRetailers have seen their business decline slightly in recent weeks and sales have remained well below pre-pandemic levels for most retailers. Many contacts reported supply chain issues, including longer delivery times and higher inventory prices. Several retailers, such as clothing and jewelry stores, saw very low foot traffic and depressed sales. However, hardware stores, food suppliers, and furniture stores reported strong demand, and some sought to expand.
Work in AtlantaContacts indicated that employment levels and hours worked increased slightly over the reference period. Most said employment levels were at or below pre-pandemic levels, and about half of contacts expect employment levels to slowly increase as demand improves. Large leisure and hospitality companies have reported a strong willingness on the part of employees on leave to return to work when recalled. The remote work position has remained largely unchanged from the previous report, and several noted that this made it easier for them to fill highly skilled positions. Many companies have indicated that they plan to encourage employees to be vaccinated against Covid-19, but at this point they will not require it. Some contacts offered paid leave to be vaccinated or sought to be vaccinated locally.
Bank in ChicagoIn consumer markets, demand for loans declined slightly, although residential mortgage activity remained strong. Consumer lending standards tightened slightly and loan quality remained broadly unchanged. A contact from an organization that helps consumers get home loans noted that many clients who participated in the federal government’s Covid-19 mortgage forbearance program were concerned about whether their income would recover enough for them to be able to. resume their payments in June, when the program is set to expire.
Expenses in Saint-LouisGeneralist retailers said sales either met or fell short of expectations over the past six weeks, but have a better outlook for the coming quarter due to vaccines and stimulus payments. A local furniture store reported that sales increased on the same weekend that customers received stimulus checks.
Minorities and Women in MinneapolisMost Minority and Women-owned Business Enterprises, or MWBEs, reported negative revenue trends compared to the same period last year and the previous quarter. Some expected modest improvement for the first quarter of 2021. A strong majority said federal stimulus programs had helped their business to some extent; of those who did not benefit, most were ineligible or had not requested assistance. Contacts noted the reluctance of immigrant business owners to seek help for fear of compromising their immigration status or that of their family members. Financial instability was high among these companies. In a district-wide survey, a significantly higher share of MWBE said they would be insolvent within three months if current economic conditions persisted compared to non-MWBEs. They were also more likely to have cut wages, for staff or for themselves.
Agriculture in Kansas CityThe agricultural economy has strengthened alongside a sharp rebound in farm incomes and agricultural credit conditions. In the most recent survey period, the majority of district contacts indicated that farm income was higher than a year ago for the first time since 2013, resulting in an increase in reimbursements of loans and slight increases in farm property values. Crop prices have increased slightly since January and remain considerably higher than a year ago.
Manufacturing in DallasThe manufacturing recovery in Texas slowed considerably in January, but accelerated in early February, with growth in output and demand picking up sharply. February’s growth was broad-based and led by non-durable goods, particularly food and chemicals. A majority of manufacturers have noted that supply chain shortages are disrupting business, as is worker absenteeism due to Covid-19 quarantines. The full impact of the winter storms in mid-February is not yet known, but some contacts have reported temporary facility closures.
Prices in San FranciscoInflation recovered slightly over the review period. Most of this increase is due to rising oil and electricity prices, with only a few companies able to pass the higher costs on to end consumers. Prices for building materials, such as lumber, wall panels, steel and asphalt, continued to rise from already high levels. Some agricultural products also experienced modest price increases, notably wheat, corn and soybeans. Contacts in the hospitality and financial services industries reported stable or declining prices.
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