One-third of Fed districts experienced flat or declining activity as 2020 closed, according to the Beige Book survey

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The forecast: One-third of the 12 U.S. central bank districts reported flat or declining activity during November and December, according to the Federal Reserve’s latest Beige Book survey released Wednesday. Most districts said activity increased only modestly. What happened: Some districts reported a decline in retail sales, an unusual development for the end of the year holiday season. Auto sales were weaker. However, there was a rebound in activity in the energy sector for the first time since the start of the pandemic.

A growing number of Fed districts reported a drop in employment levels in the final two months of 2020. Inflation appeared to be bubbling, almost all districts reported modest price increases, and companies said they were able to pass some of these costs to consumers. The Big Picture: Economists believe economic conditions will get worse before they get better. The prospect of broader vaccinations against COVID-19 has raised expectations for a further economic recovery after June. The next two quarters could be challenging. Market reaction: Stocks rose Wednesday as the House moved to impeach President Donald Trump a second time. The Dow Jones Industrial Average DJIA, + 0.24% was up 41 points in mid-afternoon trading.