The 2020 Mid-Year Economic Update_long

Fed Beige Book: Downward Economic Trend Shows Signs of Moderating

According to the Federal Reserve Beige Book economic report released Wednesday, economic conditions remained weak or deteriorated further during the period from mid-April through May, though five Districts noted the downward trend is showing signs of moderating. Though expectations of contacts within the Districts have improved, economic activity is not expected to increase substantially through the end of the year.
 
Here is an overview of the report:
 
Manufacturing declined or remained weak in most Districts. New York characterized the sector as having stabilized, while Dallas mentioned signs of stabilization. In contrast, Richmond reported a rise in both new orders and shipments.
 
Transportation contacts in most Districts say that ...

According to the Federal Reserve Beige Book economic report released Wednesday, economic conditions remained weak or deteriorated further during the period from mid-April through May, though five Districts noted the downward trend is showing signs of moderating. Though expectations of contacts within the Districts have improved, economic activity is not expected to increase substantially through the end of the year.
 
Here is an overview of the report:
 
Manufacturing declined or remained weak in most Districts. New York characterized the sector as having stabilized, while Dallas mentioned signs of stabilization. In contrast, Richmond reported a rise in both new orders and shipments.
 
Transportation contacts in most Districts say that shipping volume either remained at low levels or continued to decline. Contacts in the Cleveland District generally stated that while shipping volumes remain down across all market segments, the steep drop-off earlier this year has abated.
 
Although the residential real estate market remains weak, agents in eight Districts reported an uptick in home sales. The reasons cited include seasonal factors, low interest rates, declining house prices, and tax credits for first-time buyers. Much of the sales increase was found in the lower-priced end of the market.
 
New home construction appeared to have stabilized at very low levels in seven Districts, with Kansas City reporting an uptick in construction. Home inventories were trending down in Philadelphia, Richmond, Atlanta, Kansas City, and Dallas. However, Chicago reported that inventories remain elevated.
 
Commercial real estate markets continued to weaken across all Districts. Eight Districts cited difficulty in obtaining financing as one of the primary reasons for delaying or stopping construction of new developments and for limiting sales of existing properties.
 
Most Districts said that credit conditions remained stringent or tightened further. The credit quality of loan applicants and existing clients showed deterioration in Philadelphia, Richmond, Cleveland, and Dallas, although Richmond noted that the rate of deterioration has slowed.
 
Energy activity continued to weaken across most Districts, and demand for natural resources remained depressed. Coal production and prices fell substantially in the Cleveland District. The number of drilling rigs operating in the Kansas City District is 60% below its peak last fall, and working rigs in Texas have fallen 15% over the past six weeks as global demand for oil remains low. However, one production facility in the Gulf of Mexico just opened in May and is expected to make a major contribution to oil and natural gas output once it reaches full production. Wind energy projects expanded in the Kansas City and Minneapolis Districts.
 
Labor market conditions continued to be weak across the country, with wages generally remaining flat or falling. In manufacturing, while employment levels remained low, several Districts saw signs that job losses may be moderating.
 
With few exceptions, the District Banks reported that prices at all stages of production were generally flat or falling. The notable exception to the downward pressure on input prices was oil. Increases in oil prices were widely reported. However, prices for other energy commodities, like coal and natural gas, remained relatively low.
 
Click here to read the full Beige Book report.

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