Economy
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/media/k2/items/src/147119775b044cf8665a95a4d27d46f1.jpg)
Fed Beige Book: Modest Economic Acceleration in August
Written by Sandy Williams
September 3, 2020
Economic activity increased modestly in most of the U.S. in August but remained well below pre-COVID-19 levels, said the Federal Reserve in its latest Beige Book publication. “Continued uncertainty and volatility related to the pandemic, and its negative effect on consumer and business activity, was a theme echoed across the country,” said the Fed in its report.
Manufacturing rose in most Districts and spurred activity at ports, in transportation and at distribution firms.
Consumer spending improved, especially in the automotive sector, along with additional growth, though at a slower pace last month, in retail and tourism.
Residential construction was a bright spot last month. Home sales surged despite higher prices and inventory was snapped up leaving availability tight. Banks reported loan activity up slightly, supported by residential mortgages. Widespread decline was seen in commercial construction and commercial real estate purchasing.
Employment was up overall in August, with gains in manufacturing mentioned most often. Hiring remained volatile, however, particularly in the service industries, with Districts reporting permanent layoffs due to soft demand. “Firms continued to experience difficulty finding necessary labor, a matter compounded by day care availability, as well as uncertainty over the coming school year and jobless benefits,” said the report. Wages were flat to slightly higher.
Pricing pressure remained modest in August with input prices rising faster than selling prices. Supply chain disruptions and demand surges caused spikes for some products, such as structural lumber. Freight rates also climbed higher due to increases in demand, noted several districts.
Highlights from the Beige Book by Federal Reserve District:
Boston – Business contacts continued to cite the disruptive effects of the pandemic on all aspects of their activity, even as recovery began or continued in some sectors. Employees of some firms were called back, while others remained on furlough or have permanently lost jobs. The strength of the region’s housing markets in July provided some support for contacts’ optimism that the pandemic merely delayed the usual spring rebound.
New York – Growth in the regional economy has stalled in recent weeks, with activity still well below pre-pandemic levels. Retail activity and the single-family housing market have continued to improve. The labor market remains weak and hiring activity has slowed. Selling prices and wages have been mostly steady, on balance.
Philadelphia – Business activity was flat during the current Beige Book period and remained far below levels attained prior to the onset of COVID-19. Firms continued to face hiring difficulties, and wages trended higher for low-wage jobs. Prices also trended slightly higher amid ongoing price spikes. Uncertainty is extremely high as contacts await layoffs, evictions, foreclosures and bankruptcies while the coronavirus persists and the stimulus ends.
Cleveland – The region’s economy grew modestly and at a pace similar to that of the previous reporting period. However, activity remained below pre-pandemic levels across most sectors. Staff levels changed very little and wages were mostly steady. Price pressures increased somewhat as input costs increased. Contacts expected moderate improvement in customer demand, although expectations have been scaled back.
Richmond – The Fifth District economy continued to improve in recent weeks, but activity remained considerably below pre -pandemic levels in most segments. A few notable areas of strength were auto sales, existing home sales and trucking shipments. Employment continued to increase, but the pace of hiring slowed compared with the prior report. Price growth picked up, but remained modest overall.
Atlanta – Economic conditions were mixed. Labor markets improved modestly and nonlabor costs were subdued. Certain retail segments were strong, while others reported softness. Tourism activity remained soft. Residential real estate conditions improved, and commercial real estate activity was mixed. Manufacturing activity increased. Banking conditions rebounded slightly.
Chicago – Economic activity increased strongly, but the pace of growth slowed, and activity remained below pre-pandemic levels. Employment and manufacturing increased strongly, consumer spending, construction and real estate increased moderately, and business spending increased slightly. Wages increased slightly, and prices rose modestly. Financial conditions improved modestly. The pandemic continued to weigh on agriculture.
St. Louis – Economic activity has increased modestly, but was highly variable across sectors. Auto dealers reported strong sales, and restaurants reported some improvement. Tourism and hospitality contacts reported that higher COVID-19 cases over the past month reduced demand. The outlook among contacts remains pessimistic, on net, but has improved slightly since the previous report.
Minneapolis – Ninth District economic activity rose modestly. Job postings rose, but many firms expressed concern about future demand. Some segments of consumer spending and tourism saw improvements, while many services firms reported declines. Despite an overall pullback in new construction projects, residential building showed signs of resilience. Crop conditions were strong but faced low prices, and oil production fell significantly.
Kansas City – Economic activity strengthened moderately but remained below pre-pandemic levels in many sectors. Consumer spending increased moderately, with gains in retail, auto, restaurant, and tourism sales. Residential home sales and prices also rose moderately, but commercial real estate conditions worsened. Manufacturing activity expanded moderately, while conditions in the energy and agriculture sectors remained weak.
Dallas – Increasing COVID-19 infections in the Eleventh District have disrupted the budding economic recovery in some sectors. While manufacturing activity continued to expand, service sector activity declined overall in July, but resumed its nascent recovery in August. Energy activity remained depressed. Sharply rising home sales were a bright spot. Outlooks were increasingly uncertain as surging COVID-19 cases disrupted business sentiment.
San Francisco – Economic activity in the Twelfth District expanded slightly. Employment levels increased marginally. Price inflation remained generally unchanged. Sales of retail goods rose slightly, while conditions in the consumer and business services sectors remained precarious. Activity in the manufacturing sector increased modestly and the agriculture sector remained weak. Residential construction activity picked up briskly, while activity in the commercial market increased a bit. Lending activity ticked up further.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/04/sandy-williams.jpeg)
Sandy Williams
Read more from Sandy WilliamsLatest in Economy
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/construction.png)
US construction spending slips in July
Construction spending in the US in July was slightly lower than June. Despite the decline, it increased notably year on year (y/y).
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/2023/07/FedRes.png)
Beige Book: Economic growth hit by tighter consumer spending
Growth in the US economy continues to struggle in most districts. The Federal Reserve’s Beige Book report for August shows two-thirds of reporting districts flat or declining economic activity.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/economy.jpg)
Steel Summit 2024: Dr. Basu predicts near-term weakness in US economy
“The US economy, despite some near-term weakness I suggest in early 2025, is going to be strong," Dr. Anirban Basu said this week.
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/2023_News_Img/7.Jul-23/Chicago-skyline-summer-2022v2.jpg)
Chicago Business Barometer ticked up in August, remains low
The Chicago Business Barometer edged up in August but remains in contraction territory, according to the latest release from Market News International (MNI) and the Institute for Supply Management (ISM).
![](https://www.steelmarketupdate.com/wp-content/uploads/sites/2/images/Featured_News_Icons/construction2.png)
ABI remains soft despite July gains
The July AIA ABI score has recovered nearly six points over the last two months following the near four-year low recorded in May