Economic expansion was no better than modest over the last several weeks, and “optimism has waned” among some business owners and leaders for robust economic growth going into the new year as the coronavirus crisis surges, according to the latest report issued Wednesday from the Federal Reserve on current economic conditions.
The Fed’s latest 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), noted that although modest or moderate economic expansion was reported across the nation, there are some weak spots.
The Fed report said four Federal Reserve districts described little or no growth, “and five narratives noted that activity remained below pre-pandemic levels for at least some sectors.”
Further, the report stated, Philadelphia (the district bank that produces the report, with input from all others) and three of the Fed’s four midwestern districts reported that activity began to slow in early November as COVID-19 cases surged.
The report also noted that banks in several districts are seeing deterioration in loan portfolios, “particularly for commercial lending into the retail and leisure and hospitality sectors.”
An increase in delinquencies in 2021 is more widely anticipated, the report bluntly states.
Even though most of the Fed banks reported that businesses they contacted for the report said their outlook remains positive, the report stated that “optimism has waned.”
“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 states.