Fed Report Shows Widespread Impact from COVID-19

Written by Sandy Williams

New data from U.S. Federal Reserve Districts shows economic activity declined in all regions of the country in April and May due to disruption caused by the COVID-19 pandemic.

Almost all areas of economic activity were negatively impacted during the period. Most districts reported a severe drop in manufacturing activity with production especially weak in auto, aerospace and energy. Construction slowed as new projects were delayed or canceled. Consumer spending fell sharply as retail establishments closed and travel and tourism was restricted by stay-at-home mandates. Home sales dropped due to fewer listings and showings. Rents went unpaid by commercial tenants and banks reported strong interest in Paycheck Protection Program loans.

Virus infection rates at meat processing plants caused plant closures, and agricultural sales deteriorated. Energy activity, already suffering from low oil prices, saw historically low numbers of active drilling rigs.

Employment layoffs and furloughs rose sharply and business turned to PPP loans to try to mitigate staffing loss. Firms that were ready to rehire staff encountered challenges bringing workers back due to health concerns, lack of childcare and unemployment benefits that paid more than wages. Businesses used wage adjustments to keep operations running, some by cutting wages and others by offering temporary increases.

Several districts reported lower prices for oil, steel and agricultural commodities, while higher prices were seen for grocery items. Discounts were offered on apparel, travel and automotive. Firms noted incurring extra costs from following pandemic safety protocols, including higher prices for personal protective equipment.

The following are highlights from the Federal Reserve Beige Book for the 12 federal districts:


Activity continued declining as a result of pandemic-related economic shutdowns and social distancing guidelines. Retail and tourism firms cut employment, staffing firms saw reduced demand, and most manufacturing contacts froze hiring. Respondents said the outlook was very uncertain.


Business activity continued to fall sharply during the current Beige Book period, as the COVID-19 pandemic persisted. Nearly all sectors were operating at lower levels of activity. Government assistance eased liquidity concerns and addressed rapidly rising joblessness. General prices have begun to fall, but the wage path remains mixed. Firms also remain uncertain of the future.


Customer demand declined in a broad range of industries. The few areas of strength were limited to grocery sales and business lending. Firms responded with widespread layoffs, deep cuts to capital spending, and wage reductions for a growing minority of firms. Inflation pressures eased because of weak demand and lower commodity prices. Though many firms believe the worst declines have passed, few are expecting a strong recovery.


The Fifth District economy contracted further in recent weeks as the shutdown measures to slow the spread of the COVID-19 outbreak continued to have severe consequences. Retail, travel, and hospitality remained some of the hardest hit industries, but negative impacts were reported in every sector. Employment declined sharply and price growth slowed slightly, remaining modest.


Economic conditions remained weak. Labor markets were soft and nonlabor costs decreased. Retail sales of essential products and services rose and ecommerce activity grew. Hospitality activity continued to weaken. Residential real estate slowed somewhat and commercial real estate activity was mixed. Manufacturing activity decreased as new orders fell. Banking conditions were mixed.


Economic activity declined sharply as the coronavirus caused major economic upheaval. Employment, consumer spending, business spending, construction and real estate, manufacturing, and agriculture all decreased substantially. Wages edged up and prices were little changed. Financial conditions improved modestly.

New York

The regional economy continued to contract since the last report, though there were scattered signs of a pickup in early May. Businesses reported widespread layoffs and flat to declining wages, but the vast majority of separations were deemed temporary. Prices paid rose slightly, while selling prices edged down. Leisure and hospitality and retail trade have remained the most severely affected. Financial firms reported weaker activity.

St. Louis

Economic conditions have weakened moderately since the previous report. Around half of firms are closed temporarily. Among the firms that are closed, about one-third expect to reopen in the next three weeks. Banks indicated a sharp increase in delinquencies, primarily in mortgages, credit cards and auto loans, but expect fewer delinquencies in the third quarter.


The Ninth District economy contracted further. Employment fell significantly, and wage pressures fell due to the decline in activity along with wage and salary cuts by some firms. While most sectors declined, oil and gas exploration and supporting industries saw a particularly steep decline as oil prices fell dramatically. Restaurants, lodging, and tourism continued to suffer, and agriculture fell from an already low level.

Kansas City

Economic activity declined substantially since the previous survey, and contacts remained pessimistic about future levels of activity. Contacts reported broad-based declines in consumer spending. Real estate activity declined significantly, and sales fell at transportation, wholesale trade and professional and high-tech services firms. Manufacturing activity contracted sharply, and energy and agricultural sectors weakened further.


Economic activity contracted further, though the pace of decline moderated from April to early May in manufacturing and services. Oilfield activity fell to record lows. Home sales dropped sharply but were beginning to slowly improve. Employment plummeted, and selling prices fell. Outlooks were bleak and uncertain, largely centered on the speed and scope of the reopening.

San Francisco

Economic activity in the Twelfth District contracted markedly. Employment declined dramatically due to virus-related disruptions. Prices remained generally flat. Activity in retail trade, consumer and business services, and manufacturing all contracted noticeably. Activity in the agriculture sector slowed further. The residential real estate market was mixed, while the commercial side slumped. Lending activity increased due to PPP loans.

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