Uncertainty Holds Back Economic Recovery in the US: Fed Beige Book

Uncertainty Holds Back Economic Recovery in the US: Fed Beige Book

Posted Thursday, September 3, 2020 by
Arslan Butt • 1 min read

The Fed’s latest Beige Book indicates that economic recovery in the US continues at a sluggish rate on account of the coronavirus pandemic even as business activity and employment show signs of improvement in August. The report also reveals that the rebound in the US economy is underway at an uneven pace, with some sectors recovering while some others are still reeling under the impact of the pandemic.

While the housing market was improving as a result of the central bank’s low interest rates, sectors like construction and agriculture were facing challenges due to the pandemic and the ensuing lockdown. Other sectors that contribute to the economy like manufacturing, retail and even tourism were on the rise, as was consumer spending – a key factor that impacts the consumer-driven economy of the US.

Economic activity was showing signs of a strong rebound through May and June immediately after reopening but the pace has since slowed down on account of a resurgence in cases across some hotspots in the country. A reduction in financial aid received by both households and businesses as the stimulus efforts began to taper are also impacting the pace of economic recovery.

The Fed observes, “While the overall outlook among contacts was modestly optimistic, a few Districts noted some pessimism. Continued uncertainty and volatility related to the pandemic, and its negative effect on consumer and business activity, was a theme echoed across the country.”

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