Fed Warns of a Slower Job Recovery on Health Concerns
The Beige Book of the Federal Reserve of the United States has warned of a slow recovery in terms of employment in several American districts. It is a result of the health concerns of employees due to the pandemic, which has led companies to adopt more flexible work schemes.
Thus, a generalized increase in employment has been observed. Industrial companies have been the ones that have registered the most employment despite the recorded dismissals. Even so, the statement also finds that companies from various districts have found it easier to hire workers.
The document informs that several companies have reported additional costs for the deployment of sanitary measures. These include personal protective equipment, hygiene equipment, as well as the deployment of the technology necessary for remote work.
The Beige Book confirms that in some cases, wages reached normal levels. However, the most common has been a slight increase in salaries in all districts. It occurred due to the difficulty of companies to find workers, especially in cases of workers from high demand.
The publication has observed a general increase in economic activity, although with a modest growth rate, observing differences in reactivation between the different sectors of activity.
Thus, the residential housing markets continued to experience a constant demand for new and second-hand homes, as well as a higher application for mortgages registered by banks.
On the contrary, the conditions for the real estate deteriorated in many districts. However, construction activity and rent remained stable.
Fed is not likely to raise rates
In March, when the coronavirus started beating up on the US economy, the Federal Reserve chopped a key interest rate down close to zero. A forecast from last month’s Fed meeting showed a rate hike wouldn’t come before 2024.
The central bank is not likely to move off that course since the Beige Book says the economic recovery has been uneven. Changes in economic activity greatly varied by sector.
Manufacturing is recovering at a moderate pace. Retail sales are levelling off. On the other hand, tourism is seeing a little bit of improvement. However, according to the report, restaurants are worried that colder weather will hurt business by limiting outdoor dining.
Most of the Federal Reserve’s regional banks say that employment is increasing. Still, the growth in employment remains slow, and employers keep reporting new furloughs and layoffs.
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