The U.S. economy grew more slowly in August as anxiety over the coronvirus, the end of federal benefits and an increase in permanent job losses hindered the recovery, the Federal Reserve said Wednesday.
Here’s some of the more noteworthy takeaways from the Fed report:
• “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,” the Boston Federal Reserve said.
The Boston Fed is one of 12 regional Fed banks scattered around the country. The information collected by the banks from businesses in their districts form the basis of the Beige Book’s conclusions.
• “Uncertainty is extremely high as contacts await layoffs, evictions, foreclosures, and bankruptcies while the coronavirus persists and the stimulus ends,” the Philadelphia Fed said.
• “Some businesses have noted less trouble bringing back furloughed workers and hiring new ones in recent weeks, as unemployment benefits were scaled back,” the New York Fed. “However, a number of companies noted that concerns about child care and the upcoming school year remain constraints on worker availability.”
• ”The majority of firms believed that by next spring, their staff levels would still be below pre-pandemic levels,” the Cleveland Fed said.
• “Much of retail shopping remained weak, particularly at brick and mortar stores,” the Richmond Fed said. “Auto sales, on the other hand, were strong.”
• “Some businesses rescinded salary cuts, while others maintained pay cuts, froze salaries, or eliminated bonuses and/or contributions to 401K plans,” the Atlanta Fed said.
• “Some larger firms also reported laying off furloughed workers in the face of slower recovery,” the St. Louis Fed said.
• “A large professional services firm in Minneapolis-St. Paul said, “I anticipate furloughs becoming layoffs if some of our shelved work doesn’t start up,” according to the Minneapolis Fed.
• “When asked how likely it is that their business will permanently shut down within the next 12 months, 90 percent of contacts said it is not likely,” the Dallas Fed reported.