Little or no changes in loan volumes were reported by bankers in the last few weeks of 2020, and optimism for economic recovery in the wake of COVID-19 vaccines has waned over the recent surge in infections and deaths, according to the latest report issued Wednesday from the Federal Reserve on current economic conditions.
In its latest Beige Book (a report on current economic conditions, summarized from comments received from contacts outside the Fed – such as from business owners, bank leaders and others – published eight times a year from each of the Fed’s 12 district banks), the Fed reported that its banking contacts said they anticipated stronger demand from borrowers in coming months for new government-backed lending programs.
But that anticipation, the Fed report noted, is tempered by concern over the recent coronavirus resurgence and the implications for near-term business conditions – even while the prospects for widened distribution of vaccines to battle the pandemic are growing.
In other areas, the report stated that most Fed districts reported that economic activity increased modestly since the previous Beige Book was published in early December. Conditions, however, remained varied, the report stated. Two districts reported little or no change in activity, while two others noted a decline.
On consumer spending, reports were mixed, the Fed said. “Some districts noted declines in retail sales and demand for leisure and hospitality services, largely owing to the recent surge in COVID-19 cases and stricter containment measures. Most Districts reported an intensification of the ongoing shift from in-person shopping to online sales during the holiday season,” the Fed said.
In other areas, the Fed reported since Dec. 2:
- Auto sales weakened somewhat.
- The energy sector’s activity expanded for the first time since the onset of the pandemic.
- Manufacturing activity continued to recover widely, despite increasing reports of supply chain challenges.
- Residential real estate activity remained strong, but accounts of weak conditions in commercial real estate markets persisted.