WASHINGTON: The US economy continued to recover at a slight to modest pace through early October as consumers bought homes and increased spending, but the picture varied greatly from sector to sector, the Federal Reserve said on Wednesday.
The Fed’s Beige Book report was decidedly more upbeat than the September version, with more districts using the words “positive” and “optimistic” to describe various aspects of their local economies, report agencies.Still, the anecdotal report of business conditions across Fed districts painted a picture of an uneven recovery from the pandemic-induced downturn.
On consumer spending for instance, the Chicago Fed reported it had “increased robustly”, the New York Fed said it had “levelled off”, and the Kansas City Fed described it as having “declined modestly”.
“Districts characterised the outlooks of contacts as generally optimistic or positive, but with a considerable degree of uncertainty,” the Fed said in the report.
Manufacturing activity increased at a “moderate” pace and consumer spending grew, but some districts said retail spending was beginning to level off.
The Fed found that steady demand for homes boosted the residential real estate market and lifted overall loan demand. But the commercial real estate market, in contrast, continued to “deteriorate” in many districts with the exception of warehouses and industrial space.
Low inventory of homes and cars may have limited sales growth in those markets to different degrees, some districts said. Banking contacts in many districts also expressed concern that delinquencies could rise, though they have so far remained stable.The Fed’s survey was conducted in its 12 districts from September through Oct 9.
The employment scene was mixed. Hiring continued at varied paces across sectors and Fed districts, but the trend of temporary layoffs becoming permanent persisted.
A COVID-19 survey by the Philadelphia Fed summed it up: “Recalls of furloughed workers have slowed - to 5 per cent in September from 13 per cent in July.