The Fed’s Beige Book Warns of a Slowdown in the US Recovery
The Beige Book of the Federal Reserve has warned of a slowdown in the pace of the economic recovery of the United States. The document provides a detailed evaluation of the economy by the twelve regional central banks of the United States with information collected before November 20th.
According to the report, in recent weeks, most of the Federal Reserve districts have been characterized by modest to moderate economic expansion. However, the institute has alerted four of the 12 districts of the Fed, which registered little or no growth. Those districts reported that activity began to slow in early November as a result of the spike in Covid-19 cases.
The Fed’s business contacts indicated that the forecasts remained positive. Still, that optimism had diminished due to concerns about the second wave restrictions to contain the virus.
In terms of employment, almost all districts reported job growth, although the pace of job creation was slow. Many companies have explained that they have problems hiring people. Because citizens have to take care of their children due to school closings and distance education. Some companies even speculated that unemployment would grow in winter before falling again in 2021.
Powell affirms that there is no disagreement with the Treasury
Jerome Powell indicated Wednesday that there was no division between the central bank and Treasury Secretary Steven Mnuchin over the expiration of emergency loan programs.
Concern over a dispute arose on November 19. Mnuchin announced that he would end several of the emergency loan programs implemented to support the pandemic economy. They received authorization under the CARES Act of stimulus at the end of the year, under the law.
Shortly after Mnuchin asked Powell to return the unspent money in the funds, the Fed issued a brief statement. It stated it wanted “the entire package” of measures to support a still-struggling economy.
That message did not intend to show the division between the Fed and the Treasury Department, stated Powell on Wednesday in response to a question during testimony before the United States House Committee on Financial Services.
Powell did not indicate how the central bank can respond to the risk of economic momentum fading
Small businesses will have a hard time surviving until vaccines become available, Powell said, citing a recent meeting with community bankers.
“There are many smaller businesses in their communities that will have a hard time surviving this winter. Covid thrives in cold weather. People are staying at home. It’s going to be tough for a lot of small businesses, Powell stated.
He did not give any indication of how the central bank can respond to the risk of fading economic momentum when it meets Dec. 15-16. However, he repeated that he would use all his tools to help the economy recover.
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