Economy Saw Modest Growth in Late 2020, Fed Report Says -- Update
By Paul Kiernan
WASHINGTON -- The U.S. economy grew "modestly" in the final
weeks of 2020, as a resurgence in Covid-19 cases prompted activity
in some sectors to slow, a Federal Reserve report said
The Fed's periodic compilation of anecdotes from business
contacts, known as the Beige Book, provided the latest evidence
that the pandemic dealt a setback to the economic recovery in
recent months. Soaring infection rates and efforts to contain the
spread of Covid-19 also contributed to the U.S. labor market's loss
of 140,000 jobs in December, the first employment decline since the
pandemic struck last spring, the Labor Department said Friday.
"Although the prospect of Covid-19 vaccines has bolstered
business optimism for 2021 growth, this has been tempered by
concern over the recent virus resurgence and the implications for
near-term business conditions," the central bank said Wednesday.
The report said most Fed districts reported that economic activity
increased modestly since the previous reporting period, but noted
"conditions remained varied."
Two of the Fed's 12 districts reported no growth in recent
weeks, while two others reported declines in activity.
The Fed's characterization of economic conditions represented a
downgrade from its previous Beige Book report, released Dec. 2,
when policy makers described economic growth as "modest or
moderate." At that time, business contacts signaled the possibility
of a potential slowdown given the surge in Covid-19 infections that
was under way.
According to Wednesday's report, parts of the country saw
declines in retail sales and in demand for hospitality and leisure
services -- the industries hardest-hit by the pandemic. Ski resorts
in the mid-Atlantic were open, but operating at reduced capacity
and with restrictions on restaurants. One banker in Cleveland noted
that delinquency rates were up among hotel operators.
Other sectors, such as manufacturing and residential real
estate, remained generally strong. Even in the most-affected
industries, some firms that adapted quickly were able to mitigate
the damage: One clothing retailer in New England reported a 5%
year-over-year increase in November revenue, as online sales more
than offset a 30% decline in store traffic.
Write to Paul Kiernan at email@example.com
(END) Dow Jones Newswires
January 13, 2021 15:42 ET (20:42 GMT)
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