‘US economic activity picks up, but below pre-pandemic level’
Economic activity has picked up in the US, but remains well below the pre-coronavirus pandemic level, the Federal Reserve said.
“Consumer spending picked up as many nonessential businesses were allowed to reopen,” the Fed said in its latest Beige Book released on Wednesday.
“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.”
The Beige Book, published eight times per year, contains economic reports from 12 Federal Reserve districts, each of which is monitored by a regional Federal Reserve Bank, reports Xinhua news agency.
Leisure and hospitality spending improved, but was “far below” year-ago levels, according to the Beige Book.
Most districts reported that manufacturing activity moved up, but from a very low level.
“Outlooks remained highly uncertain, as contacts grappled with how long the COVID-19 pandemic would continue and the magnitude of its economic implications,” said the central bank.
Employment increased on net in almost all districts as many businesses reopened or ramped up activity, the Fed said, noting that districts highlighted gains in the retail and leisure and hospitality sectors.
However, payrolls in all districts were well below pre-pandemic levels, and job turnover rates remained high, with contacts across districts reporting new layoffs, according to the report.
“Contacts in nearly every district noted difficulty in bringing back workers because of health and safety concerns, childcare needs, and generous unemployment insurance benefits,” the Fed said.
Many contacts who have been retaining workers with help from the Paycheck Protection Program (PPP) said that going forward, the “strength of demand” would determine whether they can avoid layoffs, the Fed added.
Patrick Harker, President of the Federal Reserve Bank of Philadelphia, said at a virtual event on Wednesday that the path of the US economy largely depends on developments involving COVID-19 as the country has failed to control the pandemic.
“A Fed President might like to think otherwise, but there is only so much policymakers can do right now to affect the economy,” Harker said.
“Our country’s economic performance in a large part depends on what happens with COVID-19.”