Fed Beige Book Points to Generally Improving Economy

By SBE Council at 14 April, 2021, 5:28 pm

by Raymond J. Keating-

The latest edition of the Fed's 'Beige Book' pointed to the improvement in the economy accelerating some from late in February to early April.

Based on interviews with 'key business contacts, economists, market experts, and other sources,' it was reported that consumer spending 'strengthened,' tourism was 'more upbeat,' auto sales expanded despite microchip shortages constraining new vehicle inventories, and nonfinancial services 'generally improved.' As for manufacturing, in spite of 'widespread chain disruptions,' production increased with half the districts 'citing robust growth.'

As for banking and real estate, it was reported: 'Bankers in most reporting Districts saw modest to moderate increases in overall loan volumes. Sustained high demand and tight supply of single-family homes further pushed up prices, and builders noted ongoing production challenges, including rising costs. Reports on commercial real estate and construction varied, with activity in the hotel, office, and retail segments generally remaining weak.'

While agriculture was 'mostly stable,' coal was down, and oil and gas drilling was 'flat to up.'

As for job growth, it picked up, but the pace varied by industry, with employment 'generally strongest in manufacturing, construction, and leisure and hospitality.'

At the same time, it was noted: 'Hiring remained a widespread challenge, particularly for low-wage or hourly workers, restraining job growth in some cases.' In fact, some 'mentioned raising starting pay and offering signing bonuses to attract and retain employees.'

Finally, the general economic outlook among those surveyed was 'more optimistic than in the previous report, boosted in part by an acceleration in COVID-19 vaccinations.'

Indeed, the near-term recovery very much has to do with vaccinations happening across the nation, as well as internationally. Subsequent growth will be more significantly impacted by an assortment of developments and measures, including policymaking in such areas as taxes, regulations, trade policy, and government spending.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.

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