Reopening? Yes, the U.S. economic reopening is just beginning. But as for a rebound, we’ll have to wait — and it’s anyone’s guess how long. For now, the Federal Reserve Beige Book released on Wednesday (May 27) found that U.S. companies are suffering from a continued overall economic decline.
The Beige Book, in which the Fed surveys businesses about conditions across the country, found that declines continue to be entrenched despite a gradual reopening of at least some U.S. companies. The data reflects findings and commentary from business owners as measured through May 18.
The Beige Book takes commentary from various regional Federal Reserve banks and drills down into what the Fed terms “anecdotal information” to paint a portrait of the economy’s current state.
Overall, verticals such as the hospitality, travel and leisure sectors continue to see a downdraft. For instance, Boston’s hotel industry reported cancellations of conventions and other events that have shaved off 200,000 room-nights.
As for pricing trends, the Fed noted that “pricing pressures varied, but were steady to down modestly on balance. Weak demand weighed on selling prices, with some contacts noting discounting for apparel, hotel rooms and airfare.” However, the report also noted that supply-chain disruptions and strong demand led to higher prices for some grocery items like meat and fresh fruit.
Where might there be some green shoots? The Fed said that in New York — a well- known coronavirus hot spot — the regional economy “continued to contract since the last report, though there were scattered signs of a pickup in early May. Businesses reported widespread layoffs and flat to declining wages, but the vast majority of separations were deemed temporary.”
As for reopening efforts, consider St. Louis, where around half of the firms are closed temporarily but “about one-third expect to open in the next three weeks.” Yet despite the economy’s reboot there, the Fed found that local banks “indicated a sharp increase in delinquencies, primarily in mortgages, credit cards and auto loans, but expect fewer delinquencies in the third quarter.”
Further, according to the Beige Book, “although many contacts expressed hope that overall activity would pick up as businesses reopened, the outlook remained highly uncertain and most contacts were pessimistic about the potential pace of recovery.”