Wednesday, March 22, 2023

Economic Recovery in Parts of US Hurt by Surge in Infections, Fed Says By


© Reuters.

By Yasin Ebrahim – The U.S. economy continued to expand at a moderate pace, but parts of the country are experiencing a slower recovery following a surge in Covid-19 cases, according to the Fed’s Beige Book released Wednesday.

“(F)our Districts described little or no growth, and five narratives noted that activity remained below pre-pandemic levels for at least some sectors,” according to the central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through Nov. 20.  “Philadelphia and three of the four Midwestern Districts observed that activity began to slow in early November as COVID-19 cases surged.”

Ahead of the crucial jobs monthly report on Friday, the report suggested that employment gains continued but at a slow pace, while the pace of inflation in most districts was modest. 

“Nearly all districts reported that employment rose, but for most, the pace was slow, at best, and the recovery remained incomplete …  firms in most districts reported that wages grew at a slight or modest pace overall,” the report said. “In most districts, firms reported modest to moderate increases of input prices, while the selling prices of final goods rose at a slight to modest pace.”

Federal Reserve Chairman Jerome Powell on Tuesday said the U.S. economy’s road to recovery was still uncertain.  

The report warned of an anticipated rise in delinquencies next year amid a deterioration of commercial lending portfolios following a pandemic-led hit to leisure and hospitality sectors.  “An increase in delinquencies in 2021 is more widely anticipated.”

Looking ahead, while most districts reported that firms’ outlooks remained positive, optimism has waned on increased Covid-19 restrictions at a time when many are concerned about the looming end of stimulus measures put in place to curb the impact of the pandemic. 

“Many contacts cited concerns over the recent pandemic wave, mandated restrictions (recent and prospective), and the looming expiration dates for unemployment benefits and for moratoriums on evictions and foreclosures,” the report said.


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