Beige Book: Growth remained slow in many districts
Yahoo Finance's Brian Chueng breaks down the release of the Fed's Beige Book with Akiko Fujita, and UBS Global Wealth Management's Head Americas Fixed Income, Thomas McLoughlin.
Video Transcript
AKIKO FUJITA: I want to get to some breaking news out from the Fed. The fed up with its Beige Book pointing to some positives in the economy-- consumer growth, one, but also the Fed pointing to concerns around a tight labor market. Brian Chueng is following those headlines for us. Brian.
BRIAN CHUENG: Well, Akiko, as you mentioned, the Federal Reserve just released its Beige Book. This is a detail of what economies around the country look like. Keep in mind the Federal Reserve has 12 districts, so it's basically all of those districts reporting in to say what the recovery really looks like on the ground. And across the board, it does appear that employment increased in almost all of the 12 districts, although growth remains slow, which kind of reinforces the viewpoint that the recovery is still ongoing. But it's really significantly slowed, especially as a lot of those virus cases have picked up since the later part of the summer.
Some few breakdown points, consumer spending growth did remain positive, but some districts reported a leveling off of things like retail sales, although there was a slight uptick in tourism activity. Apparently people are going back out and feel comfortable with going out and spending some of their vacation time during the summer.
Tight labor markets were an interesting feature. This is not because people are going back to work, but it's because a lot of employers simply can't find people that are willing to overcome the health implications of being back in person, in addition to concerns about childcare. So it does seem like, yes, there are tight labor markets. But as we know, Akiko, still over 10 million people sidelined right now.
An interesting kind of fold here within the Beige Book is that commercial real estate does continue to show some pressures, the Beige Book describing conditions broadly as continuing to deteriorate in many districts. Think-- take for example Federal Reserve Bank of Boston in the Northeast, where malls and lifestyle stores were doing, quote, "much worse." Apparently rent collection was as low as 20% in some cases. That's not 20% decline. That means on the whole they were collecting only 20%. So a pretty dire outlook over on the commercial real estate front.
And then one last point that's worth mentioning, a few districts saying colder weather presents some sort of uncertainty in the future. You look at the Federal Reserve Banks of Philadelphia and St. Louis saying that that could provide some trouble for specifically restaurants in the future. So again, overall, it does look like growth is slowing across this country, although the economy is still chugging along.
