Fed survey finds economy slowing in parts of country

A Federal Reserve survey of trade conditions in the United States found modest economic gains earlier this year, although parts of the country experienced slowdowns due to a new wave of COVID-19 cases.

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The Fed’s report released on Wednesday said that most of the Fed’s 12 regions have reported modest gains in economic activity in recent weeks.

But three districts – New York, Philadelphia and Cleveland – said activity had weakened. Two districts – St. Louis and Kansas City – said activity was generally unchanged since the Fed’s last meeting in mid-December.

The Fed said reports on consumer spending, which drives 70% of economic activity, were mixed. Some districts have reported declining retail sales and demand for hospitality and recreation services as local governments impose more stringent measures to contain the surge in virus cases.

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“While the prospect of COVID-19 vaccines has bolstered business optimism for 2021 growth, this has been tempered by concern over the recent resurgence of the virus and its implications for near-term business conditions,” he said. said the Fed.

The Fed’s report, known as the Beige Book, will serve as the basis for discussions when central bank officials hold their next interest rate meeting January 26-27.

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The Fed cut interest rates to a record low of zero to 0.25% last March. Rates are expected to remain at extremely low levels during this year and beyond.

The Beige Book said demand for workers was greatest in manufacturing, construction and transportation, but employers in those industries reported difficulty filling job openings.

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“These hiring difficulties have been exacerbated by the recent resurgence of COVID-19 cases and the resulting workplace disruption in some districts,” the report said.

The leisure and hospitality sectors have reported further layoffs due to tighter containment measures in response to an increase in cases of the virus.