Fed Beige Book: Economic Activity Increases Amidst Uncertain Outlook

Written by Sandy Williams

The July Federal Reserve “Beige Book” showed economic activity increased in almost all Districts, but was far below pre-pandemic levels. Information from Districts collected on or prior to July 6 revealed a pickup in consumer spending as states began lifting COVID-19 restrictions.

Automotive sales led the rebound in consumer activity as well as sustained growth in food and beverage and home improvement sales, said the Federal Reserve. Manufacturing expanded, but from very low levels, and construction remained mostly subdued. Home sales rose moderately, but commercial real estate activity saw little change.

Agriculture continued to suffer financial decline and the energy sector dipped lower due to limited demand and oversupply.

The Paycheck Protection Program, along with loan deferrals from private lenders, helped to bolster liquidity for firms in the near term and retain workers. Some firms noted that avoiding future layoffs would depend on the economy’s strength.

“Outlooks remained highly uncertain, as contacts grappled with how long the COVID-19 pandemic would continue and the magnitude of its economic implications,” said the Federal Reserve.

Input and selling prices were generally flat across the Districts. Supply chain challenges were reportedly inflating prices for COVID-19-related medical and safety equipment.

Some Districts reported higher prices for beef and food and beverage items. Automotive prices, both new and used, were higher due to low inventories.

Following are highlights from the Federal Reserve’s Beige Book:


Economic activity generally improved since the last report, even as significant disruptions attributable to the pandemic continued. Some firms called back workers let go earlier in the spring, and a few engaged in net new hiring, while others began layoffs. Activity in the region’s residential and commercial real estate markets remained exceedingly slow. The outlook continues to be unusually uncertain.

New York

The regional economy has begun to rebound in recent weeks, though activity is still well below pre-pandemic levels and many sectors remain depressed. Businesses have called back some furloughed workers and there have been scattered reports of new hiring, but the labor market remains weak. Prices and wages have been mostly steady, on balance.


Business activity expanded moderately during the current Beige Book period, but remained far below levels attained prior to the onset of COVID-19. Firms faced several challenges for hiring, yet wages appear to be trending slightly lower. In contrast, prices are trending slightly higher, as the market and supply chain disruptions of a fitful economic restart have created various price spikes. Uncertainty has increased.


Activity picked up across a wide range of businesses as more of the economy reopened. However, business conditions remained weak overall. And while contacts expect activity to increase further in coming months, they remain concerned about the sustainability of the recovery if the spread of COVID-19 is not contained. This caution is partly reflected in continued weakness in capital spending and hiring plans.


The Fifth District economy expanded as many segments of the economy were able to reopen, although economic activity has yet to return to pre-pandemic levels. Retail and leisure travel, in particular, benefited from eased restrictions. Employment rebounded somewhat, but remained well below prior levels. Price growth accelerated moderately, mainly driven by supply chain disruptions and high demand for certain goods.


Economic conditions remained soft. Labor markets improved and nonlabor costs were muted. Overall, retail sales strengthened. Tourism activity resumed, though limited by capacity constraints. Residential real estate conditions improved, and commercial real estate activity was mixed. Manufacturing activity weakened. Banking conditions worsened.


Economic activity increased strongly. Employment, consumer spending, and manufacturing increased substantially, while business spending and construction and real estate activity increased modestly. Wages edged up, prices declined slightly, and financial conditions deteriorated modestly. The pandemic continued to weigh on agriculture incomes.

St. Louis

Economic activity has rebounded sharply since late May; however, overall conditions remain significantly depressed and the pace of recovery appears to have slowed since mid-June. In comparison with our previous report, the outlook among contacts is slightly more pessimistic while also much more uncertain.


Ninth District economic activity was mixed across sectors since the previous report, after more dramatic contractions in recent reporting periods. Consumer spending and tourism improved—after significant previous declines—due to emergency federal stimulus and the gradual reopening of state economies in the District. Most other sectors saw continued decline overall, especially relative to normal activity levels.

Kansas City

Economic activity rebounded slightly in June, and contacts expected additional gains in the months ahead. Consumer spending increased modestly, including higher retail, auto, restaurant and tourism sales. Residential real estate also picked up, but commercial real estate conditions deteriorated further. Manufacturing activity expanded slightly, but the energy and agriculture sectors remained a drag on the regional economy.


Economic activity in the Eleventh District rebounded, but was still well below pre-COVID levels. Manufacturing and service sector activity grew. While drilling activity fell to new lows and loan demand contracted further, sentiment among energy and finance contacts improved. New-home sales rose strongly. Employment held steady, according to contacts. Input costs increased and selling prices fell. Outlooks improved, but the upward trend in new COVID-19 cases has increased uncertainty.

San Francisco

Economic activity in the Twelfth District contracted modestly. Employment levels increased slightly. Prices remained generally flat. Sales of retail goods rose moderately, while consumer and business services activity contracted sharply. Activity in the manufacturing sector was mixed, and the agriculture sector remained weak. Residential construction activity picked up somewhat, while the commercial side was mixed. Lending activity ticked up.

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