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Fed's Beige Book details some economic impact from coronavirus
While the U.S. economy saw modest to moderate growth in recent weeks, the Federal Reserve's Beige Book released Wednesday showed the coronavirus was starting to impact some industries, including travel, tourism, and manufacturing. As these are the sectors most likely to be affected, NAFCU's Curt Long noted that "Fed contacts signaled broad concern over the potential impact of the coronavirus."
"As markets have settled somewhat this week and a spending bill works its way through Congress, Fed officials are likely to be more data-driven in future rate decisions," said Long, NAFCU's chief economist and vice president of research. "Barring a deterioration in the labor market, or a clear escalation in the impact of the virus, the [Federal Open Market Committee (FOMC)] will likely hold rates at its next meeting."
The FOMC, at an unscheduled meeting Tuesday, cut interest rates 50 basis points in efforts to mitigate potential economic effects of the coronavirus. The committee is scheduled to meet March 17-18. In addition, Congress announced Wednesday that a deal had been reached to provide $8 billion in emergency funding to fight the virus. The House passed the package Wednesday afternoon; the Senate could pass it as early as today to send to the president's desk.
The coronavirus and upcoming presidential election were cited as potential risks by Fed contacts, who expect modest growth in the near term.
Other highlights from the newest Beige Book include:
- consumer spending generally picked up, but growth was uneven across the nation, including mixed reports of auto sales;
- although manufacturing activity expanded in most parts of the country, some supply chain delays were reported as a result of the coronavirus and several districts said that producers feared further disruptions in the coming weeks; and
- overall loan growth was flat to up modestly in most districts, though notable exceptions were St. Louis, New York, and Kansas City, where declines were reported.