Beige Book Summary of Commentary on Current Economic Conditions by Federal Reserve District
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For use at 2:00 PM EDT Wednesday April 14, 2021 TheBeigeBook Summary of Commentary on Current Economic Conditions By Federal Reserve District April 2021 Federal Reserve Districts Minneapolis Boston New York Chicago Cleveland Philadelphia San Francisco Kansas City St. Louis Richmond Atlanta Dallas Alaska and Hawaii The System serves commonwealths and territories as follows: the New York Bank serves the are part of the Commonwealth of Puerto Rico and the U.S. Virgin Islands; the San Francisco Bank serves San Francisco District. American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. This report was prepared at the Federal Reserve Bank of Dallas based on information collected on or before April 5, 2021. This document summarizes comments received from contacts outside the Feder‐ al Reserve System and is not a commentary on the views of Federal Reserve officials. National Summary 1 What is the Beige Book? The Beige Book is a Federal Reserve System publication about current economic conditions across the 12 Federal Reserve Districts. It charac- Boston A-1 terizes regional economic conditions and prospects based on a variety First District of mostly qualitative information, gathered directly from each District’s sources. Reports are published eight times per year. New York B-1 What is the purpose of the Beige Book? Second District The Beige Book is intended to characterize the change in economic conditions since the last report. Outreach for the Beige Book is one of Philadelphia C-1 many ways the Federal Reserve System engages with businesses and Third District other organizations about economic developments in their communi- ties. Because this information is collected from a wide range of con- tacts through a variety of formal and informal methods, the Beige Book Cleveland D-1 can complement other forms of regional information gathering. The Fourth District Beige Book is not a commentary on the views of Federal Reserve officials. Richmond E-1 How is the information collected? Fifth District Each Federal Reserve Bank gathers information on current economic conditions in its District through reports from Bank and Branch direc- Atlanta F-1 tors, plus interviews and online questionnaires completed by business- Sixth District es, community organizations, economists, market experts, and other sources. Contacts are not selected at random; rather, Banks strive to curate a diverse set of sources that can provide accurate and objective Chicago G-1 information about a broad range of economic activities. The Beige Seventh District Book serves as a regular summary of this information for the public. St. Louis H-1 How is the information used? The information from contacts supplements the data and analysis used Eighth District by Federal Reserve economists and staff to assess economic condi- tions in the Federal Reserve Districts. The qualitative nature of the Minneapolis I-1 Beige Book creates an opportunity to characterize dynamics and identi- Ninth District fy emerging trends in the economy that may not be readily apparent in the available economic data. This information enables comparison of Kansas City J-1 economic conditions in different parts of the country, which can be helpful for assessing the outlook for the national economy. Tenth District The Beige Book does not have the type of information I’m looking Dallas K-1 for. What other information is available? Eleventh District The Federal Reserve System conducts a wide array of recurring sur- veys of businesses, households, and community organizations. A list of statistical releases compiled by the Federal Reserve Board is available San Francisco L-1 here, links to each of the Federal Reserve Banks are available here, Twelfth District and a summary of the System’s community outreach is available here. In addition, Fed Listens events have been held around the country to hear about how monetary policy affects peoples’ daily lives and liveli- hoods. The System also relies on a variety of advisory councils— whose members are drawn from a wide array of businesses, non-profit organizations, and community groups—to hear diverse perspectives on the economy in carrying out its responsibilities. National Summary The Beige Book ■ April 2021 Overall Economic Activity National economic activity accelerated to a moderate pace from late February to early April. Consumer spending strengthened. Reports on tourism were more upbeat, bolstered by a pickup in demand for leisure activities and travel which contacts attributed to spring break, an easing of pandemic-related restrictions, increased vaccinations, and re- cent stimulus payments among other factors. Auto sales grew, even as new-vehicle inventories remained constrained by microchip shortages. The picture in nonfinancial services generally improved, partly supported by strengthening demand for transportation, professional and business, and leisure and hospitality services. Despite widespread supply chain disruptions, manufacturing activity expanded further with half the Districts citing robust growth. Bankers in most reporting Districts saw modest to moderate increases in overall loan volumes. Sustained high demand and tight supply of single-family homes further pushed up prices, and builders noted ongoing production challenges, including rising costs. Reports on commercial real estate and construction varied, with activity in the hotel, office, and retail segments generally remaining weak. Agricultural conditions were mostly stable over the reporting period. Activity in the energy sector was mixed; coal production fell, while oil and gas drilling was flat to up. Outlooks were more optimistic than in the previous report, boosted in part by an acceleration in COVID-19 vaccinations. Employment and Wages Employment growth picked up over the reporting period, with most Districts noting modest to moderate increases in headcounts. The pace of job growth varied by industry but was generally strongest in manufacturing, construction, and leisure and hospitality. Hiring remained a widespread challenge, particularly for low-wage or hourly workers, restraining job growth in some cases. Commercial and delivery drivers were specifically cited as in short supply, as were specialty and skilled tradespeople. Some firms noted absenteeism due to COVID-19 was down. Employment expectations were generally bullish. Wage growth accelerated slightly overall, with more significant wage pressures in industries like man- ufacturing and construction where finding and retaining workers was particularly difficult. Some contacts mentioned raising starting pay and offering signing bonuses to attract and retain employees. Prices Prices accelerated slightly since the last report, with many Districts reporting moderate price increases and some say- ing prices rose more robustly. Input costs rose across the board, but especially in the manufacturing, construction, retail, and transportation sectors—specifically, metals, lumber, food, and fuel prices. Cost increases were partly at- tributed to ongoing supply chain disruptions, temporarily exacerbated in some cases by winter weather events. There were widespread reports of increased selling prices also, but typically not on pace with rising costs. Contacts generally expect continued price increases in the near term. Highlights by Federal Reserve District Boston New York Economic activity in the First District expanded at a The regional economy grew at a strong pace for the first modest to moderate pace in late February and March. time during the pandemic, with growth broad-based Tourism seemed poised for a summer rebound. Two across industries. Hiring picked up and wages continued firms enacted large layoffs, but otherwise headcounts to grow moderately. Consumer spending and tourism were stable or up. The outlook was mostly optimistic, but picked up noticeably. Input price pressures have intensi- several contacts expressed growing concerns about fied, and more businesses are raising their selling prices. inflation. 1 National Summary Philadelphia St. Louis Business activity picked up to a moderate pace of growth Reports from contacts indicate that economic conditions during the current Beige Book period. However, severe have been moderately improved since our previous myriad supply constraints continued to hamper potential report. Many contacts cited faster-than-expected pace of growth from demand described as “on fire,” and activity vaccinations for stronger-than-expected activity and an remained below levels attained prior to the pandemic. improving outlook. Employment ticked up modestly, as wage growth and prices continued at modest and moderate paces, respec- Minneapolis tively. The District economy grew moderately, with signs of acceleration. Job openings and employment rose, but Cleveland unemployed workers faced obstacles in job searches. The District’s expansion accelerated with a new round of Construction showed renewed signs of growth, manufac- government stimulus and more widely available vac- turing continued to increase, and higher commodity cines. There were even signs of improvement in the hard prices benefited farmers. Despite improved oil prices, -hit accommodation and food services sector. Supply drilling remained subdued. Minority-owned firms reported chain disruptions spread, however, limiting growth and more financial instability than firms overall. putting upward pressure on input costs. Looking forward, firms expect the economy to grow robustly in 2021 as Kansas City supply chain constraints