Economy
Beige Book Shows Sharp Drop in Economic Activity
Written by Sandy Williams
April 18, 2020
Economic activity contracted “sharply and abruptly” last month, according to the Federal Reserve’s Beige Book report. The report, covering activity through April 6, showed leisure and hospitality industries bearing the brunt of the decline.
“All Districts reported highly uncertain outlooks among business contacts, with most expecting conditions to worsen in the next several months,” said the report.
Most districts reported declines in manufacturing with some suffering more than others. Shutdowns in the auto industry and of non-essential business reduced demand for manufactured products and resulted in steep employment cuts.
Demand for food and medical products soared, but producers struggled with production delays due to infection-prevention measures and supply chain disruptions.
Four districts reported a decline in energy prices. The energy market saw oil and gas prices plummet, resulting in lower output and reduced investments. Prices increased significantly for freight and for some agricultural and commodity goods. Prices declined significantly for non-essential and luxury items, with companies turning to online sales to keep businesses afloat.
Employment declines were steep due to mandated closures and a severe drop-off in demand. In the near term, more job cuts are expected, but many firms hope to reverse layoffs and furloughs once business conditions recover. According to Labor Department data last week, 22 million people, or 13.5 percent of the labor force, have filed for unemployment since mid-March.
States are beginning to look at reopening businesses in May as infections subside in some regions, but until consumers are comfortable resuming normal activity, business will likely remain subdued.
In New York, one of the states hit hardest by COVID-19, reports from business sectors were “mostly quite negative to varying degrees.” Demand fell sharply in manufacturing and distribution, services, construction, real estate and banking and finance.
“All told, the tone of the Beige Book is as bleak as the economic reality we see every day,” said Jefferies economist Thomas Simons.
Sandy Williams
Read more from Sandy WilliamsLatest in Economy
ISM September survey captures deepening manufacturing gloom
The Institute for Supply Management’s (ISM) latest monthly report on manufacturing reflects a bleak view of American industry in September.
Key industries concerned over government shutdown’s impact on steel, manufacturing
Trade groups cautioned that a prolonged shutdown could strain US industry.
Chicago Business Barometer catches cold winds of contraction in September
The Chicago Business Barometer's September reading indicates a softening in overall business activity in the Midwest for the third consecutive month, with new orders and backlogs retreating further.
Metalforming market sentiment takes a dive in September: PMA
Metalforming manufacturers anticipate a decrease in near-term conditions, according to the Precision Metalforming Association's (PMA) Business Conditions Report for September.
AIA: Architecture firms still under pressure
Architecture firms reported a modest improvement in billings through August, yet business conditions remained soft, according to the latest Architecture Billings Index (ABI) release from the American Institute of Architects (AIA) and Deltek.