Fed sees modest growth, but says optimism is tempered by virus resurgence By Reuters

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© Reuters. FILE PHOTO: Federal Reserve Building in Washington

(Reuters) – U.S. economic activity has picked up modestly in recent weeks and a growing number of Federal Reserve districts saw a drop in employment as a surge in coronavirus infections prompted more closures, the central bank of the United States. In the Fed’s latest “Beige Book” report, a collection of anecdotes from companies across the country, Fed officials revealed how the footprint of the pandemic varied by region and industry as infections rose. It reduced the optimism promised by the arrival of effective vaccines against the coronavirus. “Although the outlook for COVID-19 vaccines has bolstered business optimism for 2021 growth, this has been tempered by concerns about the recent resurgence of the virus and the implications for short-term business conditions,” the Fed noted. in the report. While manufacturing activity continued to rebound in nearly all Fed districts, reports on consumer spending were mixed. The US economy cut 140,000 jobs in December as the country faced a surge in COVID-19 infections, the first job loss in eight months and a sign that the economic recovery could be losing momentum. But analysts and Fed officials say there are reasons to think the economy could recover in the second half of 2021, fueled by the launch of coronavirus vaccines and a new round of pandemic-related government aid. A $ 900 billion aid package approved in late December should help support the economy through spring. The prospect of more short-term stimulus increased last week when Democrats won two runoff elections that will give them effective control of the United States Senate, making it easier for the incoming administration of President-elect Joe Biden to obtain the legislation in The congress. Democrats already control the US House of Representatives. Fed officials have reiterated their promise to keep short-term interest rates low and to keep central bank asset purchases until the economy is on a more stable footing. The Fed’s next policy meeting is scheduled for January 26-27. The Beige Book was prepared at the San Francisco Federal Reserve based on information collected on or before January 4, 2021.

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