By Howard Schneider and Ann Saphir
WASHINGTON (Reuters) – Federal Reserve officials saw “little or no growth” in four of their 12 U.S. districts and only modest growth elsewhere in recent weeks amid a rapidly spreading health crisis and the impact of a recession that has devastated some businesses and families even as many others thrive.
In the Philadelphia region and much of the Midewest “activity began to slow in early November as COVID-19 cases surged,” the U.S. central bank said on Wednesday in its latest “Beige Book” compendium of anecdotes from businesses across its 12 reserve districts.
While some sectors like manufacturing did well, signs of stress mounted.
“Banking contacts in numerous Districts reported some deterioration of loan portfolios, particularly for commercial lending into the retail and leisure and hospitality sectors,” Fed officials reported.
The reports, collected before Nov. 20, included stories of factory managers struggling to find workers to help meet a boom in goods sales, even as hard-hit restaurant and hospitality businesses continued to face depressed demand for in-person services because of the coronavirus pandemic.
“Firms that were hiring continued to report difficulties in attracting and retaining workers,” the Fed said, with the spread of the virus causing new school closings that had impacted peoples’ ability to work.
The divide among regions and sectors that are doing well and those that are not has become a hallmark of the current recession and presents the Fed with a difficult decision as it debates whether to provide more support for the economy at its Dec. 15-16 policy meeting.
The economy is continuing to recover from the deep blow it suffered at the start of the pandemic, and the prospect of a coming COVID-19 vaccine means the recovery could gain steam next year.
In the meantime, the country is 10 million jobs short of where it was in February, a large hole to fill with the pace of job creation slowing in recent months.
(Reporting by Howard Schneider; Editing by Paul Simao and Chizu Nomiyama)
