Fed Beige Book Reports First Impacts of Coronavirus

Written by Sandy Williams

The coronavirus has begun to affect business in the United States, according to the latest Federal Reserve “Beige Book.” The economy is moving forward at a modest to moderate pace, but growth is uneven. The virus appears to be negatively impacting travel and tourism in the U.S., which showed only moderate to flat growth in February.

Manufacturing expanded across most districts in the U.S., but supply chain disruptions were noted as a result of the coronavirus. More disruption is expected as the virus spreads. Transportation was flat to slightly higher, while Mid-Atlantic ports saw strong volume growth.

Consumer spending expanded overall, but auto sales were mixed. Residential sales made modest gains, while nonresidential sales and leasing activity were more varied across federal districts.

Hiring continued to be constrained by a tight labor market. Construction reported projects delayed due to insufficient labor. Some firms changed from temporary to full-time labor to avoid losing staff during the off-season. Wages grew at a moderate rate in most districts. Minimum wage increases and labor shortages were blamed for putting upward pressure on wages and benefits.

Selling prices grew modestly along with input prices. Tariffs continued to be a concern as well as how the coronavirus might affect prices. Oil and gas prices were down as demand weakened from China.

On Tuesday, the Federal Reserve cut interest rates by half a point to counter expected economic decline from the spread of the coronavirus.

“Outlooks for the near-term were mostly for modest growth with the coronavirus and the upcoming presidential election cited as potential risks,” the report stated.

Highlights by Federal Reserve District as reported in the March 4 Beige Book:


The regional economy continued expanding in early 2020. A majority of manufacturers and retailers reported revenue increases from a year earlier. Staffing firms also reported revenue growth; some said growth was slower than in recent past periods and some said it was faster than expected. Business contacts continued to mention tight labor markets but little wage pressure. Prices stayed flat to up slightly. Outlooks remained positive.

New York

Growth in the regional economy picked up to a moderate pace. With tight labor markets, wage growth picked up but job creation remained sluggish. Both input prices and selling prices rose moderately. Housing markets firmed, while commercial real estate markets weakened further. Business contacts have grown somewhat more optimistic about the near-term outlook.


On balance, business activity resumed a modest pace of growth during the current Beige Book period after a lull last period. Tight labor markets continued to constrain employment growth to slight increases, but wage pressures ebbed to a modest pace. Price increases remained modest, and firms optimistic, but the coronavirus has increased uncertainty about future growth.


Economic activity in the Fourth District increased modestly thanks to growth in retail and professional and business services. Manufacturing demand held steady, but firms noted weaker demand because of the Boeing 737 Max production halt and concern about COVID-19’s impact on supply chains. Home and auto demand increased. Employment and wages rose modestly overall. Inflation pressures remained modest.


The Fifth District economy grew moderately in recent weeks. Manufacturing activity picked up, as did port volumes and retail sales; however, some concerns were expressed about the coronavirus lowering imports of inputs and retail goods from China in coming months. Also, employment increased and wages continued to rise. Price growth for inputs and selling prices, on the other hand, slowed to a modest rate.


Economic activity grew modestly. The labor market remained tight and wages were steady, on balance. Nonlabor costs continued to rise. The pace of retail and auto sales growth was flat. Home prices were steady, and commercial real estate activity continued to grow. Manufacturing declined, as new orders and production levels fell. Banking activity was stable.


Economic activity increased modestly. Consumer spending and employment increased modestly, while construction and real estate activity increased slightly. Business spending and manufacturing were little changed. Wages increased modestly, prices increased slightly, and financial conditions were unchanged. Farmers’ income prospects deteriorated some. The coronavirus outbreak has had little effect to date.

St. Louis

Reports from contacts indicate that overall economic conditions have been mixed, but are generally unchanged since the previous report. Overall inflation pressures increased slightly, although there were some signs of further softening. Reports from manufacturing contacts indicate somewhat of a rebound in activity after consecutive reports of slowing growth.


Ninth District economic activity grew at a moderate pace. Employment and wages increased moderately. Following a slowdown in 2019, manufacturing activity appears to have increased recently. Favorable snow conditions across much of the district boosted winter tourism, with some exceptions. Commercial and residential construction and real estate increased. Agricultural conditions were stable at low levels.

Kansas City

The district economy was largely unchanged in January and February, but activity levels were above year-ago levels in most sectors. Consumer spending slowed slightly and construction activity held steady, while manufacturing activity edged up in February for the first time since last summer. Energy activity continued to decline due primarily to low oil and natural gas prices, while the agriculture sector remained weak.


Economic activity expanded moderately, with broad-based growth seen in services (excluding retail) and manufacturing, but declining activity in the energy sector. Housing demand continued to rise broadly. Employment growth slowed to a modest pace. Input prices continued to rise while selling prices were mixed. Outlooks generally improved, though the coronavirus introduced new uncertainty into the business environment.

San Francisco

Economic activity in the Twelfth District expanded at a modest pace. Employment increased some and wages rose further. Price inflation was stable. Sales of retail goods increased markedly, and consumer and business services activity were up somewhat. The manufacturing sector contracted minutely on net, but activity in the agriculture sector increased slightly. The residential real estate market expanded modestly, while commercial real estate activity was mixed. Lending grew further.

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