Although economic activity is on upswing, Beige Book finds ‘considerable uncertainty’ about the future remains prevalent

Economic activity is increasing across the country, but a “considerable degree of uncertainty” for the future outlook is prevalent in many areas, according to the latest snapshot of economic activity released Wednesday by the Federal Reserve.

In its October 2020 Beige Book (a report on current economic conditions, summarized from comments received from contacts outside the Fed – such as from business owners, bank leaders and others – published eight times a year from each of the Fed’s 12 district banks), the Fed said that the pace of growth reported by its district bank contacts is slight to moderate.

“Manufacturing activity generally increased at a moderate pace,” the report states. “Residential housing markets continued to experience steady demand for new and existing homes, with activity constrained by low inventories.”

The report noted that bankers reported increased demand for mortgages as the key driver of overall loan demand. At the same time, the report stated, commercial real estate conditions continued to deteriorate widely, with the exception being warehouse and industrial space where construction and leasing activity remained steady.

The report also noted that bankers in many districts expressed concern that delinquency rates may rise in coming months (without giving a consistent reason for that). In the meantime, however, their delinquency rates have remained stable.

The report also found:

  • Consumer spending growth remained positive, but some areas reported a leveling off of retail sales and a slight uptick in tourism activity.
  • Auto demand remained steady, but low inventories have constrained sales to varying degrees.
  • Reports on agriculture conditions were mixed, with some areas saying they are experiencing drought conditions.
  • Restaurateurs in many areas expressed concern that cooler weather would slow sales, as they have relied on outdoor dining.

Beige Book – October 21, 2020