The US economy showed signs of life nationwide last month, but has not returned to its pre-pandemic level and the outlook remains “highly uncertain,” the Federal Reserve said Wednesday.
“Economic activity increased in almost all districts, but remained well below where it was prior to the COVID-19 pandemic,” the Fed said in its “beige book” survey.
Businesses began to reopen, and retail sales improved across the country, but there were some new layoffs and employment, too, is far below where it was before virus struck, the report said.
“Outlooks remained highly uncertain, as contacts grappled with how long the COVID-19 pandemic would continue and the magnitude of its economic implications.”
The survey was conducted before July 6, when case counts were just starting to spike in states like Florida, Texas and Arizona, and as state authorities began to roll back moves to open their economies.
But as the Fed prepares for its next policy meeting later this month, the survey shows that even as bright spots appeared in auto and home sales, as well as home improvement and food and beverage, there were signs of trouble as well.
“Contacts in nearly every district noted difficulty in bringing back workers because of health and safety concerns, childcare needs, and generous unemployment insurance benefits,” the report said.
While some firms were able to maintain their employees using the government Paycheck Protection Program, others were unsure if they would be able to keep workers on payroll, indicating “the strength of demand would determine whether they can avoid layoffs.”
The Dallas Fed noted that “a weak economy, depressed activity in the energy sector, the resurgence of COVID-19 infections and a pause in the reopening of the district economy were causing concern among contacts.”
And the San Francisco Fed reported that activity declined “modestly.”