Fed’s Beige Book sees increase in economic activity but nothing near pre-pandemic levels

Fed’s Beige Book sees increase in economic activity but nothing near pre-pandemic levels


The outlook: Economic activity increased in almost all districts, but remained well below where it was prior to the COVID-19 pandemic, according to the Federal Reserve’s Beige Book report released Wednesday. Business contacts remain highly uncertain about the outlook for the U.S. economy, as it was unclear how long the crisis would last.

What happened: While employment increased, there was also talk about new layoffs across the U.S. And firms that had retained workers with the help of the government’s Paycheck Protection Program said the strength of the economy would determine whether they can avoid layoffs.

Consumer spending was led by a rebound in vehicle sales and home improvement. Manufacturing moved up but from a very low level. Demand for services was very weak.

Big picture: The Beige Book was more positive than the prior report in May but there was no sense that the economy is out of the woods.

Market reaction: U.S. stocks were broadly higher on Wednesday with the S&P 500 index
SPX,
+0.87%
up 29 points or almost 1% in afternoon trading.


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