Beige Book
For use at 2:00 PM EDT
Wednesday
April 15, 2020
The Beige Book
Summary of Commentary on Current Economic Conditions
By Federal Reserve District
April 2020
Federal Reserve Districts
Minneapolis
Boston
Chicago
New York
Cleveland
Philadelphia
San Francisco
Kansas City
St. Louis
Richmond
Atlanta
Dallas
Alaska and Hawaii
are part of the
San Francisco District.
The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth of Puerto Rico and the U.S. Virgin
Islands; the San Francisco Bank serves American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands.
National Summary
Boston
1
A-1
First District
New York
B-1
Second District
Philadelphia
C-1
Third District
Cleveland
D-1
E-1
Fifth District
Atlanta
F-1
Sixth District
Chicago
G-1
Seventh District
St. Louis
H-1
Eighth District
Minneapolis
The Beige Book is a Federal Reserve System publication about current
economic conditions across the 12 Federal Reserve Districts. It
characterizes regional economic conditions and prospects based on a
variety of mostly qualitative information, gathered directly from District
sources.
The qualitative nature of the Beige Book creates an opportunity to
characterize dynamics and identify emerging trends in the economy
that may not be readily apparent in the available economic data.
Because this information is collected from a wide range of business
and community contacts through a variety of formal and informal
methods, the Beige Book can complement other forms of regional
information gathering.
How is the information collected?
Fourth District
Richmond
What is The Beige Book?
Each Federal Reserve Bank gathers anecdotal information on current
economic conditions in its District through reports from Bank and
Branch directors, plus phone and in-person interviews with and online
questionnaires completed by businesses, community contacts,
economists, market experts, and other sources.
How is the information used?
The anecdotal information collected in the Beige Book supplements the
data and analysis used by Federal Reserve economists and staff to
assess economic conditions in the Federal Reserve Districts. This
information enables comparison of economic conditions in different
parts of the country, which can be helpful for assessing the outlook for
the national economy. The Beige Book also serves as a regular
summary of the Federal Reserve System’s efforts to listen to
businesses and community organizations.
I-1
Ninth District
Kansas City
J-1
Tenth District
Dallas
K-1
Eleventh District
San Francisco
Twelfth District
L-1
This report was prepared at the Federal Reserve Bank of Boston based
on information collected on or before April 6, 2020. This document
summarizes comments received from contacts outside the Federal
Reserve System and is not a commentary on the views of Federal
Reserve officials.
National Summary
The Beige Book ■ April 2020
Overall Economic Activity
Economic activity contracted sharply and abruptly across all regions in the United States as a result of the COVID-19
pandemic. The hardest-hit industries—because of social distancing measures and mandated closures—were leisure
and hospitality, and retail aside from essential goods. Most Districts reported declines in manufacturing, but cited
significant variation across industries. Producers of food and medical products reported strong demand but faced both
production delays, due to infection-prevention measures, and supply chain disruptions. Some other manufacturing
industries, such as autos, mostly shut down. The energy sector, suffering from low prices, reduced investment and
output. Districts reporting on loan demand said it was high, both from companies accessing credit lines and from
households refinancing mortgages. All Districts reported highly uncertain outlooks among business contacts, with most
expecting conditions to worsen in the next several months.
Employment and Wages
Employment declined in all Districts, steeply in many cases, as the COVID-19 pandemic affected firms in many
sectors. Employment cuts were most severe in the retail and leisure and hospitality sectors, where most Districts
reported widespread mandatory closures and steep falloffs in demand. Many Districts said severe job cuts were
widespread, including the manufacturing and energy sectors. Contacts in several Districts noted they were cutting
employment via temporary layoffs and furloughs that they hoped to reverse once business activity resumes. The nearterm outlook was for more job cuts in coming months. No District reported upward wage pressures. Most cited general
wage softening and salary cuts except for high-demand sectors such as grocery stores that were awarding temporary
“hardship” or “appreciation” pay increases.
Prices
The general direction of price inflation was down for both selling prices and non-labor input prices, as Districts reported
either slowing price growth, flat prices, or modest to moderate declines in prices on balance. These trends were seen
as reflecting weaker demand for many goods and services in the wake of the COVID-19 pandemic. Four Districts also
reported further declines in energy prices. In contrast, supply chain disruptions and shifts in the composition of demand
led to significant price increases for some essential services—such as freight—and some agricultural commodities and
consumer goods. While expectations concerning agriculture prices were mixed, the outlook calls for further downward
pressure on prices on average.
Highlights by Federal Reserve District
Boston
New York
Economic activity slowed markedly in March, except
among manufacturing firms in the region whose products
saw increased demand because of the pandemic.
Retailers and tourism contacts cited dramatic fall-offs in
demand and they laid off customer-facing workers.
Software and IT services firms continued to see strong
demand, but few new customers. Real estate activity in
the region paused in March.
The regional economy deteriorated sharply since the
last report, with many companies implementing partial
temporary shutdowns and widespread staff reductions,
and some reducing wages. Selling prices were flat to
down modestly. The leisure & hospitality and retail
sectors were particularly hard hit, while the wholesale
trade and information sectors showed more resilience.
Financial firms reported weaker activity.
1
National Summary
Philadelphia
Minneapolis
Business activity fell severely during the current Beige
Book period, as the COVID-19 pandemic gripped the
mid-Atlantic. No sector was spared. Rapidly rising
joblessness has not made hiring easier, as contagion
fears and child care needs keep workers at home. Prices
tend to be falling, but the wage path is muddied, and firm
outlooks are clouded by uncertainty.
Ninth District economic activity decreased sharply due to
the pandemic. Employment fell significantly, and wage
pressures declined as a result. While effects varied
widely, most sectors contracted, with tourism and
hospitality seeing effects sooner. Though designated an
essential industry in most District states, many
commercial construction projects were put on hold due
to uncertainty about viability or supply chain disruptions.
Cleveland
Kansas City
Economic conditions deteriorated rapidly in the second
half of March as COVID-19 mitigation efforts curbed
demand across a wide array of industries. In response,
firms sought to conserve cash by cutting staff and capital
spending. Looking forward, business contacts generally
expected conditions to worsen further in coming months.
After holding fairly steady in the first half of March,
economic conditions declined sharply in recent weeks.
Consumer spending slowed significantly as auto,
restaurant and tourism sales plummeted. Manufacturing
activity contracted sharply, and energy and agricultural
sectors deteriorated as commodity prices fell sharply.
Employment levels fell slightly, but layoffs accelerated
late in the month.
Richmond
The Fifth District economy contracted as negative effects
of the coronavirus outbreak were reported across most
segments of the economy, leading to many businesses
to scale back operations and employment. The few
positive reports mainly came from producers and
transporters of essential supplies. Overall, employment
declined sharply and price growth remained muted.
Dallas
Economic activity contracted broadly, but declines were
the steepest in energy, retail, and non-financial services.
Home sales rose through mid-March but have dropped
off since then. Employment fell sharply, resulting in
downward wage pressures, and selling prices buckled
amid falling demand for most products and services.
Outlooks deteriorated rapidly as the economic impact of
the coronavirus pandemic intensified.
Atlanta
Economic activity declined, and the labor market
deteriorated due to COVID-19. Non-labor costs
remained stable. Retail sales for non-discretionary
products grew as sales of non-essential items fell.
Tourism and hospitality contacts reported significant
declines in activity. Housing activity softened, and
commercial real estate decelerated. Manufacturing
declined, but new orders held steady. Banking activity
was mixed.
San Francisco
Economic activity in the Twelfth District contracted
notably. Employment declined due to virus related
disruptions. Price inflation fell a bit. Sales of retail goods
and vehicles fell precipitously, and consumer and
business services activity declined sharply. The
manufacturing sector contracted moderately, and
activity in the agriculture sector slowed somewhat. The
residential real estate market was mixed, but grew
slightly overall. Lending actively declined moderately.
Chicago
Economic activity declined, but the intensity of decline
varied by industry. Consumer spending decreased
sharply; business spending, construction and real estate
activity, and manufacturing production decreased
moderately. Retail and hospitality payrolls plunged.
Wages edged up and prices were little changed.
Financial conditions deteriorated substantially, as did
prospects for agricultural income.
St. Louis
Economic activity has declined sharply since February.
Many firms reported moderate to severe temporary
layoffs, furloughs, or paid time off. Reports from District
banks indicate substantial and widespread increases in
demand for banking services.
2
Federal Reserve Bank of
Boston
The Beige Book ■ April 2020
Summary of Economic Activity
The coronavirus pandemic slowed business activity markedly in some First District sectors, notably retail and tourism,
while having mixed effects on others, as of the end of March. Most responding retailers closed stores and saw sales
drop significantly in recent weeks, while tourism plummeted. Software and information technology services firms
reported first-quarter growth above expectations, but a sharp drop-off in orders from new customers. Almost all the First
District manufacturers responding in this round said their sales were rising, in large part because of pandemic-related
demand; a furniture maker, by contrast, shut down production because demand fell to zero. Commercial real estate
activity halted abruptly across the region in March. First District residential real estate contacts expect March data to
show a pause. Manufacturers had cautiously positive outlooks, but other sectors expressed considerable uncertainty.
demand, meaning that prices to consumers were higher.
A drug company said that the COVID-19 pandemic led it
to cancel a planned price increase. Despite pockets of
softness in demand, software and IT services contacts
said they currently had no plans to alter selling prices.
Employment and Wages
Employment and wage changes across sectors largely
reflected demand patterns. The retailers who closed
brick and mortar stores furloughed the store workers.
Two retail contacts reported pay reductions for corporate
staff; one progressively from 5 percent to 30 percent
based on pay level, and the other 20 percent across the
board, which came with a four-day work week rather
than five. Only one manufacturer, a furniture maker who
halted production, reported laying off workers. Most
manufacturing contacts had not revised their
employment plans as a result of COVID-19. A
packaging firm said headcount fell but that was planned
long before the pandemic. A frozen fish manufacturer
was hiring to meet added demand but was concerned -because they were union workers -- that the firm would
not be able to reduce headcount when demand returned
to normal. Employment at software and IT services firms
remained steady through the first quarter, although most
contacts reported plans to do replacement hiring only for
critical roles as they moved into the second quarter. All
the responding software and IT firms have moved to a
work-from-home posture which, so far, has allowed
them to maintain full employment and full salaries.
Retail and Tourism
Prices
Retail respondents for this round mostly reported substantial drop-offs in sales, which were attributable to
COVID-19 store closings. A contact who closed stores
during the third week of March saw online sales
quadruple in the final week of March, which had
traditionally been a small portion of their total sales, but
the increase did not fully offset the in-store decline.
Another contact who closed stores in the third week of
March reported a decrease in online sales of roughly 25
percent. One contacted retail chain could keep all stores
open, and their sales were up dramatically in the first
three weeks of March; by contrast, sales in the final
week of March dropped by mid-single-digit percentages
from a year ago. An online retailer saw sales grow more
than 50 percent as workers settled into working from
home and demanded more home-office furnishings as
well as other home goods. All contacts reported they
had stronger sales in January and February than in
recent years.
Contacts cited few changes in the pricing environment.
No responding manufacturers noted any unusual pricing
pressure. A frozen fish firm said that it eliminated
substantial promotions in response to much stronger
Travel industry contacts reported that the volume of
passengers and flights fell drastically in March. Hotel
occupancy and room rates in the Boston area dropped
dramatically throughout March as large conferences and
A-1
Federal Reserve Bank of Boston
other travel plans were canceled. One tourism contact
reported that coastal communities that rely on seasonal
business are cautiously optimistic about a snap-back in
visitors who are driving-distance away soon after
advisories are lifted, reflecting pent-up demand from
cancella-tion of planned vacations throughout the spring.
Commercial Real Estate
Commercial real estate activity in the First District had
continued to strengthen before the COVID-19 outbreak
but fell sharply afterwards. Before the outbreak, the
Boston leasing market was robust in both the office and
industrial sectors, and rents were increasing. In the
Providence leasing market, vacancies were low and
rents were steady. In the Greater Hartford area, both the
leasing and investment sales markets were slow but
steady. The COVID-19 outbreak began affecting commercial real estate markets across the District in midMarch, with a near-total freeze in new office leasing
activity, collapse of some sales in progress, growing
disturbances in credit markets, and steep declines in
construction activity. Retail tenants were especially hard
hit, enacting store closures and mass layoffs, and many
have received at least temporary forbearance on rent
payments. In contrast, the industrial sector experienced
increased demand for warehouse space to support ecommerce in response to the outbreak. Contacts on
balance were cautious and observant, but all expressed
significant concerns about the near-term outlook for
commercial real estate activity in light of the COVID-19
pandemic.
Manufacturing and Related Services
Of 11 firms contacted this cycle, 10 reported higher sales
despite, or in many cases, because of the pandemic.
The one exception was a furniture manufacturer who
sells largely through company-owned stores; as of
March 27, they had shut down manufacturing and closed
all their retail stores because of COVID-19. Other
contacts saw rising sales for a variety of reasons, most
linked to COVID-19 and its associated effects on the
economy. A frozen fish manufacturer and a cardboard
box company attributed recent strong results to brisk
sales in grocery stores. The fish company said that the
increase in demand had left it with essentially no
inventories. A toy company said sales were good
because social distancing meant people were spending
more time at home with children. A medical goods
manufacturer had a ten-fold increase in orders for
portable ventilators. A manufacturer of membranes used
in ventilators and N-95 masks, not surprisingly, had
strong sales. The membrane manufacturer also sells into
the auto industry and said that declining auto production
freed up production for the medical market.
Residential Real Estate
Residential real estate markets in the First District
continued to experience very low inventory levels in
February (the latest data available for Rhode Island,
Massachusetts, Boston, New Hampshire, and Maine,
with no data available for Connecticut and Vermont). For
single family homes, sales were up in February from a
year earlier in Rhode Island and Maine but down in
Massachusetts, Boston, and New Hampshire. For
condos, sales rose in Rhode Island, Massachusetts, and
Boston while dropping moderately in New Hampshire
and Maine. Median sales prices generally increased and
inventory declined substantially for both single family
homes and condos. Contacts from Rhode Island,
Massachusetts, Boston, and Maine all noted that
inventory levels have been “desperately” low.
The outlook was generally positive. Even the furniture
maker was hopeful that workers could return soon and
was also investigating government programs for relief.
Several contacts were generally optimistic but said they
were more cautious than before the pandemic.
Software and Information Technology Services
Software and IT services firms reported growth that
exceeded expectations for the first quarter, but indicated
there was uncertainty looking ahead to the second
quarter. Two contacts reported that first quarter
revenues were up 20 percent to 24 percent year-overyear, and all respondents noted strong demand in the
first two months of 2020. During March, new bookings
declined drastically across-the-board and one contact
mentioned that they had zero new bookings for that
month. While contacts remain cautious about
maintaining cash flow, they plan to reduce operating
expenses by limiting travel and canceling large annual
events through the end of the year. Overall, firms
expressed uncertainty regarding the duration of this
downturn but remain cautiously hopeful in their
relationships with existing customers and the decisions
they have made to limit expenses going forward.
Contacts said they expect March 2020 data to show a
pause in housing market activity caused by the
COVID-19 outbreak, a pause they expect will continue
throughout the pandemic-related economic slowdown.■
For more information about District economic conditions visit:
www.bostonfed.org/regional-economy
A-2
Federal Reserve Bank of
New York
The Beige Book ■ April 2020
Summary of Economic Activity
The Second District economy deteriorated sharply in the latest reporting period, amidst widespread shutdowns related
to the coronavirus pandemic. The job market weakened substantially, and wages were flat to lower. Businesses
reported that input prices leveled off and that selling prices were flat to down modestly. Activity fell sharply in nearly
every sector, except wholesale trade, where activity was essentially flat. Business contacts in manufacturing and most
service industries also expressed fairly widespread pessimism about the outlook. In general, there is great uncertainty
and concern about the duration of the coronavirus pandemic and its economic effects. Consumer spending has fallen
sharply, with a significant proportion of purchases going online. Tourism and travel ground to a halt, with many hotels
closing, and those still open seeing sharp drops in occupancy rates. Home sales and rentals, commercial leasing, and
construction activity have all largely stopped. Finally, financial sector contacts noted deteriorating conditions, and banks
reported widespread weakening in loan demand, tighter credit standards, and higher delinquency rates but have been
more lenient on existing loans.
staffing levels to hold steady from current levels, but
businesses across all other sectors expected further
staff cuts, on net.
Employment and Wages
The labor market has weakened sharply, as hiring
largely stopped and layoffs were widespread. A major
New York City employment agency, specializing in
finance and professional services, noted that most
activity has ground to a halt, but that they have not seen
many layoffs other than temp workers. An upstate
agency described it as business as usual for many
essential businesses, while other businesses have
eliminated their temporary staff and some have shut
down. A major payroll firm noted that its business has
remained steady but is expected to slip in the months
ahead.
Wages have been flat to lower since the last report.
Businesses in the hard-hit leisure & hospitality and retail
trade sectors reported fairly widespread reductions in
wages, while contacts in other service industries
indicated that wages were generally flat to down slightly.
Prices
Firms generally reported that input costs were flat, while
their selling prices were steady to down modestly.
Businesses in construction & real estate, finance,
information, and leisure & hospitality noted declines in
their selling prices, while firms in other industries
generally reported steady prices. Looking ahead,
businesses in most sectors projected that their prices
would be little changed in the months ahead. However,
information and finance businesses anticipated lower
selling prices, while those in education & health services
said they expect to raise prices modestly.
Reports from business sectors were mostly quite
negative to varying degrees. Contacts in manufacturing,
retail, and leisure & hospitality reported particularly
widespread staff reductions, while businesses in the
information, finance, wholesale, and professional &
business services indicated steady to modestly declining
staffing levels. Many contacts noted that these
reductions were largely furloughs or temporary layoffs.
Looking ahead, contacts in manufacturing, finance, and
professional & business services said they expect
B-1
Federal Reserve Bank of New York
Consumer Spending
Looking ahead, business contacts expressed great
uncertainty, though there was fairly widespread
pessimism. Those in leisure & hospitality expressed the
bleakest expectations, while those in professional &
business services tended to be the least pessimistic.
Retailers reported widespread drops in sales in March,
and the vast majority reported at least a partial
temporary shutdown. However, most do not anticipate a
full shutdown, with many shifting to mostly or completely
online sales. Non-essential retail storefronts across the
District were ordered to close in the latter part of March.
Food and personal care stores tended to fare better but
even these were seeing mixed results. Retailers
expected sales to weaken further in the months ahead.
Real Estate and Construction
Home sales and rental markets across the District have
largely paused, and many residential rental and sales
listings have been removed, reflecting stay-at-home
directives. Real estate agents were reclassified as
essential in early April, though traffic has been weak and
largely limited to virtual showings.
Vehicle sales dropped to near zero in the second half of
March, according to auto dealers in upstate New York,
as the state shut down non-essential businesses. Many
of these dealers hope to at least partially re-open before
the end of April. While essential dealer service
departments remained open, business for these
services also slowed considerably.
A major appraiser noted that selling prices of New York
City co-ops and condos were continuing to decline
through mid-March, especially at the high end. Given the
lack of activity since, though, it is difficult to gauge more
recent changes in prices and rents. Landlords are
reportedly concerned about how many tenants are going
to be delinquent on their April rent—particularly in New
York City, where a majority of residents are renters.
Manufacturing and Distribution
Manufacturers reported a widespread drop-off in
business activity and new orders in recent weeks.
Transportation firms also reported widespread declines,
but wholesalers reported that activity was flat, on
balance.
Commercial real estate markets across the District have
also ground to a halt, with office, industrial, and retail
leasing activity largely ceasing. Office availability rates
and rents have not changed noticeably thus far, but real
estate contacts have noted concern about collecting rent
from commercial tenants.
Looking ahead, manufacturers said they expect activity
to be unchanged from current levels, on balance, while
wholesalers and transportation firms anticipate
weakening activity. Businesses generally have slashed
capital spending plans, with potential implications for
some durable goods producers.
New construction starts have essentially fallen to zero,
and ongoing construction projects have paused, except
where considered essential.
Services
Banking and Finance
Service industry contacts reported weakening activity to
varying degrees. Leisure & hospitality business fell
particularly sharply, as tourism plummeted and
restaurants shut down for dining-in service. Health
service contacts noted a comparably widespread dropoff in activity and revenues. Businesses in education,
professional & busi-ness services, and information
reported more moderate, but still fairly widespread,
declines in both activity and revenues. Contacts in all
these sectors report that a majority of their staff is
working from home—ranging from about half in leisure &
hospitality to nearly everyone at information firms.
Financial service businesses have noted widespread
declines in activity and revenues. Though only
moderately pessimistic about the near-term outlook,
finance sector contacts expressed widespread concern
about maintaining adequate cash flow and collecting
payables from customers. A majority of small-tomedium-sized banks across the District reported lower
loan demand across all categories. Bankers also
reported tighter credit standards and narrowing loan
spreads across the board. Higher delinquency rates
were reported across all categories—particularly
commercial & industrial loans. Bankers were also asked,
in light of the coronavirus pandemic, if they had adopted
more lenient policies on loan repayments. The vast
majority said they had done so on residential mortgages,
compared with about half on commercial & industrial
loans, and a somewhat over half on commercial
mortgages.■
Stay-at-home directives have largely brought both
leisure and business travel to a halt. An expert on New
York City’s tourism sector noted that almost nobody is
visiting the city, and that New York City’s hotel
occupancy fell from roughly 72 percent to 15 percent by
the end of March. Many hotels have closed temporarily,
while others have re-purposed some rooms as excess
hospital space, and some as isolated office space.
B-2
For more information about District economic conditions visit:
www.newyorkfed.org/regional‐economy
Federal Reserve Bank of
Philadelphia
The Beige Book ■ April 2020
Summary of Economic Activity
Third District business activity fell severely during the current Beige Book period, as the COVID-19 pandemic gripped
the mid-Atlantic region. From March 19 through March 24, our three states ordered all nonessential businesses to close;
by April 1, statewide stay-at-home orders were in place. As of March 29, over two-thirds of the firms reported that their
new orders (or sales) had fallen in excess of 5 percent – one-fifth in excess of 30 percent – and one-fourth had shut
down. Declines varied by sector; none were spared. Manufacturers were more likely to be essential and operating, but
some closed after employees tested positive. Firms furloughed or laid off workers in record numbers. Still, contagion
fears and at-home child care needs contributed to no-shows at existing jobs and kept workers from filling open jobs. The
wage path is unclear – some firms offered hardship pay, while others imposed salary cuts. Price pressures eased as oil
prices cratered and demand slumped. Uncertainty clouds outlooks as firms wait for the COVID-19 threat to subside.
Employment and Wages
some issued annual raises and bonuses early. Other
firms have added “appreciation” pay or “hazard” pay for
hourly workers who must still report to work. Many salaried workers can telecommute – three-fourths of the
firms noted an increase in their use of telecommuting.
Contacts expect wage growth to moderate in the future.
Employment contracted sharply. At the end of March,
one-fourth of the firms reported that they had shut down
– a few shutdowns were permanent. In other responses
to the crisis, one-half of the firms ceased all hiring.
Employee furloughs, reductions of temporary or contract
workers, and reductions of employees’ average work
hours were mentioned in equal measure by one-fourth of
the firms.
Prices
In contrast to wages, firms were more unified in their
belief that prices were stabilizing, if not falling. At midMarch, firms reported moderating prices compared with
the prior period. Since then, prices have eased further.
Aside from occasional price gouging, most commodity
prices have stabilized; some construction materials have
begun to fall. Contacts pointed to low oil prices and
slumping demand as factors supporting their expectations that prices would moderate further.
On average, payrolls of staffing firms’ placements appear to be down 40 to 50 percent across the District.
Even business associated with essential food
manufacturing and distribution was down over 10
percent. A Pennsylvania contact noted that a food
manufacturer shut down for two weeks after an employee
tested positive. Some staffing firms have trimmed their
own staff; others have guaranteed staff full pay through
June.
Manufacturing
As March progressed, manufacturers reported weaker
new orders – resulting in a moderate overall decline. At
mid-March, one-half of the firms reported no change; of
the remainder, twice as many noted decreases as noted
increases. By the end of March, one-third of the firms
reported no change; of the remainder, five times as
many noted decreases (or shutdowns) as noted
increases. Almost one-fifth of the firms saw orders drop
by more
Multiple staffing contacts and firms from varied sectors
reported that rising layoffs have not made it easier to
attract and retain labor. Contagion fears and at-home
child care needs have led some workers to stop showing
up for work; those concerns plus unemployment benefits
are also keeping workers from seeking other jobs.
Firms have reported a mix of wage strategies. Some
firms reduced pay for their executives and/or managers;
C-1
Federal Reserve Bank of Philadelphia
than 30 percent of prior expectations. Nearly one in 10
firms shut down.
Financial Services
By March 25, reports from financial firms were starting to
show signs of financial stress among firms and households. Volumes of credit card debt and of auto loans
began falling after March 11. In contrast, over the same
two weeks, volumes grew rapidly for two lending categories in which firms and households are able to draw
down on or request extensions of existing lines of credit:
commercial and industrial loans and home equity lines.
According to several firms with global perspectives,
supply chain issues with China have eased, and China is
mostly back to work. One contact did note that a few
plants shut down again, as demand from foreign customers waned. These contacts noted substantial declines of
demand in southern Europe and several weakening
sectors across the U.S., including oil field services, light
metals, and food production and distribution that was
oriented toward restaurants and group dining facilities.
Commercial real estate lending and home mortgages did
not appear to be impacted yet. Bankers and brokers
indicated that most deals that were already scheduled
were completed. However, contacts expect fewer deals
to be brought to the table going forward.
Consumer Spending
Nonauto retail sales plummeted, as a majority of retail
stores and restaurants closed, plus essential stores and
takeout restaurants faced limited demand under
statewide stay-at-home orders. One food and beverage
chain furloughed 700 employees without pay or benefits;
another lost 90 percent of its usual sales overnight – it
hopes to grow its takeout service to recoup a fraction of
its sales. Two food-oriented retail chains were able to
stabilize sales with losses of 30 percent or less.
Banking contacts were busy negotiating loan modifications and loan deferrals, while deciphering new Small
Business Administration rules and other programs available in the Coronavirus Aid, Relief, and Economic Security Act recovery package, as fast as the regulations
were being written. The bankers stated that liquidity was
not a problem but would be a concern if the shutdown
dragged on.
Sales of new and used cars appear to have fallen by as
much as 50 percent from February to March. From
March 19 through March 26, our three states ordered
dealers to stop sales, although they permitted selling
parts and servicing vehicles. Delaware and New Jersey
subsequently allowed limited sales.
Real Estate and Construction
Homebuilders were sidelined in Pennsylvania, but construction continued in Delaware and New Jersey. Nevertheless, projects were slowed by supply disruptions,
transactions that were complicated by disrupted local
government services, and a reluctant workforce facing
contagion fears. Buyers have not canceled existing
contracts, but new orders are nonexistent.
Tourism has virtually stopped. A majority of hotels, resorts, and attractions have reported closing and laying
off tens of thousands of employees. Most of Atlantic
City’s 26,450 casino workers were laid off when the
casinos were shut down. As of March 28, a tourism
analyst estimated that weekly travel spending had fallen
80 percent in New Jersey and Pennsylvania, and 70
percent in Delaware.
Real estate firms also noted extra hurdles with title work
and inspections required to close transactions. However,
most scheduled closings were finalized. Showings and
sales have dropped off considerably in Pennsylvania
despite switching to virtual showings. Contacts note that
activity has held up in Delaware.
Nonfinancial Services
Like manufacturers, broad service sectors also reported
weaker new orders/sales as March progressed – resulting in a severe overall decline. At mid-March about onefourth of the firms reported no change; of the remainder,
one and a half times as many noted decreases as noted
increases. By the end of March, a tenth of the firms
reported no change; of the remainder, six times as many
noted decreases (or shutdowns) as noted increases.
Almost one-fifth of the firms saw orders drop by more
than 30 percent of prior expectations. Nearly one in three
firms shut down.
Philadelphia’s commercial real estate construction fell 70
percent by the end of March – some contractors have no
projects. After initially being shut down in Pennsylvania,
commercial construction was allowed an exemption.
Unfortunately, worker attendance is less than 50 percent
on some projects. On the commercial leasing side, tenants are seeking lower rents, whether they need it or not.
As with residential construction, deals already in the
works have been finalized, but fewer new projects are
coming forward now. ■
For more information about District economic conditions visit:
www.philadelphiafed.org/research-and-data/regionaleconomy
C-2
Federal Reserve Bank of
Cleveland
The Beige Book ■ April 2020
Summary of Economic Activity
The Fourth District economy contracted sharply in the second half of March as business disruptions resulting from
COVID-19 mitigation efforts spread quickly. Consumer spending decreased materially, with restaurants, tourism, and
nonessential retail spending particularly hard hit. Residential realtors and builders noted that stay-at-home orders
curbed walk-in traffic, and pending home sales fell. Meanwhile, many new nonresidential projects were delayed, and
commercial realtors expressed concern that cash flow will suffer as tenants defer rent payments. Manufacturers’ orders
declined amid virus-related work stoppages along with pullbacks in capital equipment spending. Banking and a few
business services sectors saw activity pick up as a result of the pandemic, but, on balance, service sector activity was
down. Reports from freight and logistics firms were mixed. Looking forward, contacts generally expected economic
conditions to worsen further in coming months. Consequently, many planned to conserve cash by reducing capital
spending and cutting staffing levels in the months ahead. Weakening demand across industries generally resulted in
less upward pressure on costs and prices.
Employment and Wages
pace. For the first time since late 2015, more contacts
reported that selling prices had declined compared to
those who said they had increased. Those who said that
prices decreased generally cited reduced demand resulting from COVID-19 mitigation efforts. While this trend
was evident across most industries, it was particularly
pronounced among nonessential retailers, many of
which had been seeing increased pricing power during
the past several reports. By contrast, freight haulers
noted higher selling prices. At the same time, a considerably smaller share of contacts reported higher prices for
nonlabor input costs compared to the prior Beige Book
period. While firms in most industries expected cost
pressures to remain muted in coming months, some
manufacturers and construction contacts said that supply
chain disruptions may push prices up for some materials.
Fourth District employment fell significantly in recent
weeks as firms realigned their staff with suddenly diminished demand for their goods and services. There was
very little new hiring taking place, and contacts in most
industries reported cutting hours, staff, or both. Of those
firms that were cutting staff, the majority indicated that
they were furloughing workers rather than firing them
outright, with the hope of bringing them back once business activity resumes. Employers appeared eager to do
everything in their power to help underutilized workers.
Many reportedly increased wages temporarily for essential workers whose hours had been cut, while others
were extending healthcare benefits to furloughed workers or offering them help finding new employment.
Banks, grocery stores, and health services firms were
among the few industries that were not cutting back on
staffing. Outside of the temporary pay increases, upward
wage pressures generally diminished. Looking forward,
greater than one in two surveyed firms expected staffing
levels to fall in coming months, compared to fewer than
one in 10 that expected them to rise.
Consumer Spending
Retail activity in the Fourth District declined sharply as a
result of social distancing measures taken to mitigate the
spread of COVID-19. With a large number of dine-in
restaurants and nonessential retailers ordered to close,
many establishments lost a significant portion of their
expected revenue. A national restaurant group indicated
that revenues were lower by 60 percent year over year,
even as stores remained open for takeout and delivery,
Prices
Selling prices generally declined in recent weeks, while
nonlabor input costs increased at a noticeably slower
D-1
Federal Reserve Bank of Cleveland
while a smaller regional holding group shut down all of
its establishments because costs far exceeded revenues. Meanwhile, one luxury auto dealer reported that
while its doors remained open with reduced hours, it had
not sold a car in the second half of March. By contrast, a
handful of essential grocery stores saw a large spike in
demand recently as consumers stocked up on food and
home supplies. Contacts in the retail sector generally
expected economic distress to persist into the summer,
followed by a slow and gradual recovery.
Financial Services
Loan demand grew substantially; one banker described
it as “unprecedented,” saying that one-month growth was
likely to match what would typically be expected in a
year. Corporate clients drew down credit lines to keep
cash on hand in light of COVID-19-related revenue
shocks, while consumers rushed to refinance home
mortgages at lower rates. This activity largely offset
declines in demand for auto loans. Delinquency rates
remained low as banks worked to assist clients in these
unusual times, although many contacts speculated that
delinquency rates will climb in the coming months as
economic duress persists.
Manufacturing
Manufacturing conditions worsened as more than half of
contacts reported that demand had declined during the
last two months. Contacts noted a pullback in capital
spending along with work stoppages because the spread
of COVID-19 reduced orders. Several contacts noted in
particular that the two-week shutdown of US auto
production would have ripple effects throughout their
supply chains. More than a third of manufacturers
reported that capacity utilization was below a normal
range because demand had weakened and because
employees were increasingly missing work because of
illness, concern about the virus, and school closures.
Although a few contacts noted an uptick in demand
because of precau-tionary behavior, they expected that
demand would drop off in the future as customers work
through their built-up inventory.
Professional and Business Services
Contacts in the professional business services sector
reported a significant decline in demand for their
services in recent weeks. Multiple firms indicated that
clients have delayed the implementation of new projects
in addition to cancelling some projects already
underway. However, there were a couple of firms that
provide legal, human resources, and online commerce
consulting services that reported an increase in demand
in recent weeks. Overall, the majority of firms
interviewed expected economic conditions to remain
significantly subdued through the second quarter.
Freight
Real Estate and Construction
Reports from the freight sector were mixed. While freight
activity as a whole had declined since the onset of
COVID-19, firms that ship consumer staples such as
food, cleaning supplies, and medical supplies saw a
significant increase in demand. However, freight firms
that typically ship manufactured or imported goods
continue to see reduced volumes. Because
manufacturing output is expected to remain weak and
the elevated demand for consumer staples is expected
to wane, contacts in the freight sector generally
anticipated that business conditions will worsen further
in the second quarter.■
Reports from realtors and builders (residential and nonresidential) indicated that activity fell sharply in midMarch. On the residential side, real estate professionals
suggested that sales in 2020 had been off to a very
strong start through the first half of March, but they
weakened subsequently. Thus, while existing home
sales were relatively robust in the first quarter, pending
sales fell notably in March. Builders indicated that work
on homes under contract continued, although sales had
slowed. However, one builder noted that cancellation
rates had increased, and another was concerned that
homes under contract may not close in coming months if
rising unemployment befalls some of his buyers. Nonresidential real estate professionals indicated that
demand fell recently. Moreover, several contacts
suggested that tenants have reached out to ask for rent
deferrals or concessions. Nonresidential builders
reported that work continued on large projects that were
underway in areas that allowed it, but they have seen
some job postponements and cancellations. Contacts
on both the residential and nonresidential sides
expected demand to weaken further in coming months.
D-2
Federal Reserve Bank of
Richmond
The Beige Book ■ April 2020
Summary of Economic Activity
Fifth District economic activity declined across many sectors, quite sharply in some, due in large part to the measures
taken by businesses and consumers to slow the spread of the coronavirus outbreak. Manufacturers reported a slowdown
in shipments and new orders but most were able to keep plants open, albeit at lower levels of production. Producers of
essential supplies and food saw an increase in demand. Port contacts reported a moderate decline in import volumes,
particularly from China and Europe. Trucking companies saw steady demand as the decline in retail shipments was offset
by increases in shipments for other essential supplies. Retail, travel, and tourism firms saw sharp declines in demand and
occupancy rates and many restaurants closed or shifted to take-out or delivery only. Residential real estate contacts
reported a slowdown in foot traffic and sales while new home construction faced delays. Commercial real estate leasing
fell and some tenants looked to break leases or sought relief due to economic hardship. Bankers, on the other hand, saw
a moderate increase in demand, mainly coming from residential construction and refinance loans. On balance,
nonfinancial services firms saw a modest decline in revenue. Some farmers reported increased demand and more
favorable selling prices. Low oil and natural gas prices led energy companies to reduce activity. Employment fell sharply,
overall. Price growth remained muted.
Employment and Wages
Manufacturing
On balance, employment declined sharply; however,
individual firm experiences varied considerably. Some
manufacturers cut production and reduced staff. Others,
such as food and personal care products manufacturers, increased hours and employment in response to
stronger demand. Some business-to-business services
firms reduced weekly hours for employees and cut
temporary positions. Many consumer facing businesses
like hotels, restaurants, and retail shops reduced staff
sharply due to steep declines in demand owing to social
distancing guidelines. An outdoor recreation establishment said that they normally hire three to four hundred
seasonal staff at this time of year but right now all hiring
was on hold. No changes to wages were reported.
Manufacturers in the Fifth District reported declines in
shipments and new orders since our last report. Many
manufacturers had drops in demand resulting from
retailers closing, which led some firms to slow
production. Manufacturers also experienced supply
chain disrup-tions, involving inputs from China or
Europe. Some were hopeful that supply from China
would improve soon but were concerned that demand
would decrease further in the U.S. A cabinet
manufacturer had a sharp drop in demand, and made
plans to consolidate and downsize operations. A food
manufacturer, on the other hand, experienced strong
demand.
Prices
Fifth District port volumes fell moderately since our last
report, driven largely by a decline in imports, especially
from China and Europe. Import levels continued to
exceed export levels although the gap between the two
narrowed. Exports remained strong, particularly
agricultural products and lumber. Despite softer imports,
inventories built up at ports as companies, particularly
car dealers, refused deliveries. Port revenues were hurt
by the cancellations of cruises. However, a Fifth District
airport saw a slight increase in international cargo flights,
which was attributed to a decrease in passenger flights
on which some goods are normally transported.
Ports and Transportation
Overall, price growth remained muted since our
previous report. According to our most recent surveys,
manufacturers reported a slight deceleration in growth
of prices paid. A couple of producers pointed to recent
declines in oil and gas prices as contributing factors to
slower input price growth. Service sector firms saw an
acceleration in growth of prices paid and prices
received. Some agricultural commodity prices, such as
soy, wheat, beef, poultry, and eggs rose, in recent
weeks.
E-1
Federal Reserve Bank of Richmond
Fifth District trucking companies reported fairly steady
business in recent weeks as declines in retail shipments
were offset by increased demand from other parts of the
market. Shipments of food, laptops, and cigarettes were
particularly high. Spot market rates rose slightly as
demand shifted across sectors. Some companies struggled to find enough drivers, as a small number of drivers
were quarantined and newly trained drivers could not
get their licenses while the DMV was closed. Also, low
fuel prices helped lower operating costs.
remained fairly strong, as companies looked for extra
storage space for accumulating inventories during temporary closures. Brokers reported mixed conditions in
multifamily. Existing construction projects continued, but
new construction starts declined.
Banking and Finance
Overall, loan demand grew moderately mainly due to an
increase in construction financing and mortgage
refinance loans. Respondents indicated tepid demand
for commercial real estate and C&I loans, though several
banks mentioned that they anticipate strong demand for
CARES Act SBA loans. Auto loans declined sharply in
recent weeks. Most banks reported that deposits grew
moderately despite lower interest rates paid on all
accounts; however, they also reported rate compression.
Financial institutions noted that credit standards,
delinquencies, and credit quality remained solid;
however, they expect an uptick in delinquency rates
within the next 60 days due to deterioration in the
economy caused by the coronavirus outbreak.
Retail, Travel, and Tourism
Fifth District retail sales declined sharply since our last
report. Many stores were forced to close, and others
saw decreased demand. Retailers looked for creative
ways to remain open. A clothing store allowed for
appointment-only in-store shopping, and a florist
switched to curbside pickup. Stores lowered prices and
offered free shipping to attract customers and move
inventories. Grocery store sales increased. They added
workers to stock shelves and warehouses, but struggled
to main-tain inventories. Retailers that remained open
also re-ported increased cleaning efforts.
Nonfinancial Services
The tourism industry contracted significantly in the Fifth
District in recent weeks. Hotel occupancy fell to
unprecedented levels, leading several hotels to close
and others to operate with minimal staff. However, some
people continued to visit rentals and vacation homes.
Many restaurants closed when dining in was disallowed,
while others tried to remain open for take-out and
delivery. For many restaurants, especially those not
structured for takeout, this was not a long term solution
but a way for them to sell their perishable inventory.
Overall, nonfinancial services firms indicated a modest
decline in revenue and demand in recent weeks, which
many attributed to the coronavirus outbreak. Several
business-to-business service providers said that clients
were putting work on hold or delaying new projects. An
HR outsourcing firm in Northern Virginia said that only
about half of their field staff had security clearances to
work remotely, thereby reducing billable hours. In
contrast, a law firm said that they saw an increase in
business as clients were looking for help understanding
recently passed coronavirus aid legislation.
Real Estate and Construction
Natural Resources
Fifth District home sales declined modestly in recent
weeks. Buyer traffic decreased, but some who viewed
houses were serious about buying quickly. Inventory
levels remained low, as showings decreased since
prospective sellers were reluctant to let others into their
homes. Builders worried about excess inventories if
demand slowed further. Sale prices and days on the
market held fairly steady. Construction projects
continued but at a slower pace, and new starts fell. One
realtor mentioned that appraisals and inspections were
delayed as fewer workers were in the field.
Reports from agriculture and energy contacts were
mixed. Some farmers reported increased demand from
grocery stores and rising commodity prices. One egg
farmer said that this probably saved many farmers as
selling prices had been depressed in recent months.
Energy contacts, on the other hand, saw declines in
extraction and new exploration due to sharp declines in
oil and gas prices. ■
Fifth District commercial real estate leasing decreased
moderately since our last report. Office and retail leasing
declined sharply as companies reported no new leases.
Existing office and retail tenants looked to break leases
or asked for rent reductions and deferments, with many
claiming force majeure. However, industrial leasing
For more information about District economic conditions visit:
www.richmondfed.org/research/regional_economy
E-2
Federal Reserve Bank of
Atlanta
The Beige Book ■ April 2020
Summary of Economic Activity
On balance, economic activity in the Sixth District deteriorated from mid-February to late March, and the outlook diminished as a result of the COVID-19 pandemic. Labor market conditions weakened significantly as businesses reported
widespread layoffs and furloughs. Nonlabor costs were stable. Retail contacts noted plunging sales of discretionary
goods, and surges in spending on essential items. Hospitality and tourism contacts reported significant declines in activity as conventions were canceled and attractions were temporarily shuttered. Activity in residential and commercial real
estate slowed somewhat. Manufacturing activity deteriorated, but new orders held steady or increased as a result of
changes in product demand. Overall transportation activity declined. District bankers reported mixed conditions.
pandemic. With considerable uncertainty regarding supply
chains and demand, most sectors reported an effort to
avoid raising prices. Oil price declines benefited
businesses outside of the energy sector, helping defray
the rising cost of freight. The Atlanta Fed’s Business
Inflation Expectations survey showed year-over-year unit
costs were up 1.6 percent in March, virtually unchanged
from February. Over the next twelve months survey
respond-ents, on average, indicated they expect unit
costs to rise 1.9 percent.
Employment and Wages
District labor market conditions deteriorated over the
reporting period as the spread of COVID-19 precipitated
a sharp contraction in activity leading to layoffs and
furloughs, especially in retail, tourism and hospitality.
Grocery, home improvement, and discount stores, along
with home delivery services, experienced a surge in
demand resulting in a strong increase in hiring. Growing
restrictions on public gatherings forced many restaurants
to pivot to take-out and delivery services in an effort to
stay in business and preserve some jobs. Manufacturing
and distribution workforces remained largely intact and
those producing high-demand products indicated working longer hours. Most firms with the ability to do so
transitioned to remote working. In response to a sharp
drop in demand, the region’s energy sector experienced
a contraction in employment. Some businesses noted
actively working to connect laid-off or furloughed
employees with firms that were hiring.
Consumer Spending and Tourism
District retailers reported sales growth of grocery and
household products, office equipment, and home
improvement goods, which partially offset some of the
steep decline in discretionary consumer spending activity
due to COVID-19. E-commerce activity accelerated as
brick-and-mortar sales plummeted. There were some
reports of supply chain bottlenecking as high-traffic
retailers such as grocers, big box, and warehouse chains
struggled to manage the influx of shipments to fill empty
shelves.
Some District firms reported cutting pay, eliminating
bonuses, and reducing hours, in efforts to retain
employees. However, high demand sectors, such as
grocery, distribution, and warehousing announced
increases in hourly wages or bonuses. Some companies
still hiring have postponed pre-employment background
checks like drug tests and finger printing, largely in an
effort to reduce physical contact. Many contacts reported
relaxing attendance policies and increasing paid time off
and leave allowances. Some noted an extension of
premium pay to essential workers or employees who
deal directly with the public.
Tourism and hospitality contacts reported a massive
decline in activity across the District as a result of COVID
-19. By mid-March, most major conferences and
conventions had been cancelled or postponed, the
majority of tourist attractions were temporarily shuttered,
and hoteliers reported historically low occupancy rates.
Several contacts noted that hotels with locations close to
hospi-tals were being considered for conversion for
medical use and shelters for COVID-19 patients or
hospital staff.
Prices
Construction and Real Estate
Most contacts reported stable input costs over the
reporting period with expectations that prices may drop
as a result of lower overall demand due to the COVID-19
After a strong start to the year, District housing activity
was significantly disrupted by the COVID-19 pandemic.
Contacts indicated that since their sales pipeline was
F-1
Federal Reserve Bank of Atlanta
strong prior to the outbreak, recent transactions were
solid and cancellations were muted. However, market
participants anticipate a contraction in second quarter
sales as in-person traffic and new sales activity declined
significantly since early March. Expectations for potential
disruptions in functions such as permitting, appraisals,
deed filings, and notarizations due to social distancing
were noted, and some reports indicated a tightening of
credit and lending standards. Construction and development activity slowed and builders began strengthening
cash reserves and guarding balance sheets.
Banking and Finance
Financial institutions expressed concerns about the
potential increase in delinquencies and the impact on
both earnings and capital due to uncertainties around the
COVID-19 outbreak. Slower loan growth was reported
and some indicated they were being more careful about
underwriting, especially with residential and some commercial real estate properties. Financial institutions reported contacting customers in industries most affected
by the pandemic to determine borrowers’ potential needs
for accommodations. These industries included travel
and hospitality, retailers, restaurants and their suppliers,
transportation and logistics, and health care providers.
Given declines in market value of some institutions,
goodwill impairments were being considered. Liquidity
remained stable. Some financial institutions reported
growth in deposits while others experienced large cash
withdrawals.
Commercial real estate (CRE) contacts reported a deceleration in new leasing inquiries amid the COVID-19
pandemic. However, leasing activity that was already in
the pipeline appeared to be moving forward. Declining
tourism and travel activity significantly impacted CRE in
the hospitality and retail sectors. Investment property
sales slowed markedly due to issues associated with the
slowing of financing from commercial mortgage backed
securities and non-bank lenders; however, contacts
reported that capital was readily available at banks for
the financing of CRE projects. Banks reported that originations continued in the CRE space. Reports of tenants
seeking rent relief have begun to emerge.
Energy
Global demand for crude oil and liquefied natural gas fell
over the reporting period primarily as a result of the
COVID-19 pandemic, in spite of the fall in oil prices. As a
result of price declines, broad cost-cutting measures,
including reductions in major capital spending plans,
suspension of share buybacks, delays of onsite scheduled maintenance, hiring freezes, and the dismissal of
contractors were reported. Industrial plant and construction contacts reported delays in some petrochemical new
build and expansion projects. Utilities firms noted that
power usage declines among commercial business lines
were nearly offset by a spike in residential power usage,
as people spend more time at home. Utilities firms anticipate a further drop in power demand, particularly from
the industrial segment, as budget cuts make their way
through the sector.
Manufacturing
Manufacturing firms reported solid overall activity in late
February, but indicated conditions rapidly deteriorated in
early March due to the COVID-19 pandemic. Despite the
decline in activity, some firms suggested that new orders
were holding steady or even increasing due to changes
in product demand. Supply delivery times were reported
to be increasing.
Transportation
District transportation contacts continued to report varying levels of activity, and the majority noted some degree
of negative impacts to business due to COVID-19. Activity for logistics, trucking, and freight brokerage firms held
steady on average as consumer demand for discretionary products declined and demand for essential items
increased. However, according to railroad contacts,
overall rail traffic fell by near double digits as compared
with year-earlier levels, driven by declines in the movement of grain, coal, aggregates and iron and steel scrap,
and motor vehicles and parts. Intermodal traffic also fell.
Air cargo contacts cited a continued deterioration in
freight volumes over the reporting period. Sizeable declines in revenue and massive shifts in costs, including
implementing pay cuts across the board to help offset
some of the revenue losses, were mentioned. Ports saw
year-over-year declines in container activity as imports
from Asia slowed, and significant declines in overall
freight activity for the foreseeable future are anticipated .
Agriculture
Agricultural conditions remained mixed. Most of the
District remained drought free, with the exception of
much of Florida and other parts of the Gulf coastal region, which experienced abnormally dry conditions. On a
month-over-month basis, the March production forecast
for Florida's orange crop was down from both last
month’s forecast and last year’s production while the
grapefruit production forecast was down month-overmonth but remained ahead of last year's production.
Contacts reported the COVID-19 pandemic has resulted
in recent significant price increases for corn, rice, soybeans, milk and eggs, and an increase in demand for
Florida oranges. Contacts also reported that some District states modified trucking weight and hour requirements in response to COVID-19, which has had a positive effect on getting product to market more quickly. ■
F-2
For more information about District economic conditions visit:
www.frbatlanta.org/economy-matters/regional-economics
Federal Reserve Bank of
Chicago
The Beige Book ■ April 2020
Summary of Economic Activity
Economic activity in the Seventh District declined in late February and March, as the spread of the coronavirus caused
major economic upheaval. The intensity of the decline varied by industry, but contacts across industries expected a
large decrease in activity over the next 3 months and expected the recovery to still be underway a year from now.
Consumer spending decreased sharply; business spending, construction and real estate activity, and manufacturing
production decreased moderately. Retail and hospitality payrolls plunged, though employment for most contacts was
little changed. Wages edged up and prices were little changed. Financial conditions deteriorated substantially, as did
prospects for agricultural income.
Employment and Wages
Consumer Spending
Many retail and hospitality contacts reported large
layoffs, though employment for most Beige Book
contacts was little changed over the reporting period.
That said, contacts reported major changes in work
environments. Manufacturers facing slowdowns often
reported cutting workers’ hours, and many also planned
to use the downtime to carry out maintenance or do
productivity enhancing projects. There also were
widespread reports of workers choosing to stay home
for health safety reasons. Most nonessential workers
who could began telecommuting. Overall, contacts
expected a modest decline in employment over the
next 3 months, with few looking to increase
employment until the uncertainty created by the
coronavirus abated some. Among those still looking for
workers, challenges in filling positions persisted at all
skill levels. Wages edged up, and contacts expected
modest increases over the next 12 months. Benefit
costs increased slightly.
Consumer spending decreased sharply over the reporting period. Overall, nonauto retail sales declined
considerably as the coronavirus crisis forced store
closures across the District. Sales fell in most
segments, particularly in apparel. In contrast, grocery
and health and personal care stores saw dramatically
higher demand, with numerous reports of runs on items
such as household cleaners and toilet paper. Ecommerce also expanded significantly. Consumption of
services fell precipitously, particularly in the hospitality,
entertainment, and food service sectors as the
coronavirus crisis led to reduced travel and prohibitions
of large gatherings. Vehicle sales fell sharply and
dealerships across the District closed. Vehicle service
center activity also fell steeply.
Business Spending
Business spending decreased modestly in late
February and March. Retail inventories were generally
above comfortable levels after sales in most segments
fell. There were, however, reports of extremely low
inventories of some grocery and household products.
Most manufacturers said that inventories were at
comfortable levels. Capital spending declined some,
and contacts expected spending to decrease slightly
over the next 12 months. Outlays were primarily for IT
equipment and intellectual property,
Prices
Prices were little changed in late February and March,
though contacts expected modest price increases over
the next 12 months. Both retail and producer prices
were flat overall. Input prices were largely unchanged,
except for energy prices, which fell some.
G-1
Federal Reserve Bank of Chicago
with numerous reports of spending to support
telecommuting. Contacts also noted increased spending
on sanitation and other protective health measures for
workers. Demand for transportation services decreased
slightly overall, as lower long distance volumes
outweighed increases in local delivery services.
Commercial and industrial energy consumption declined
some, with lower usage reported from retail stores,
restaurants, hotels, and auto manufacturers.
Banking and Finance
Financial conditions deteriorated substantially over the
reporting period. Participants in the equity and bond
markets reported large increases in volatility and large
decreases in liquidity across a wide range of asset categories. Business loan volumes decreased moderately
as greater uncertainty led borrowers to hold off on new
loan requests. That said, many businesses drew on
existing lines of credit. Lenders also reported a large
number of requests for loan payment deferrals. Lenders
indicated that they were actively working to implement
the Small Business Administration’s Paycheck
Protection Program and expected a large volume of
applications. Business loan quality deteriorated
moderately across most sectors, but especially in the
hospitality, retail, and non-profit sectors. Standards
tightened some. Consumer loan demand decreased
moderately due to a large pullback in requests for auto
and home-purchase loans. Contacts noted that
consumers were carrying higher credit card balances
even though new spending was lower. Mort-gage
refinancing volumes continued to increase. Reports on
consumer loan quality were mixed: most contacts saw
no change to date, but others experienced a deterioration in line with rising unemployment. Consumer loan
standards tightened modestly on balance.
Construction and Real Estate
Construction and real estate activity decreased moderately over the reporting period. Residential construction
activity fell modestly. Contacts indicated that only a
small share of projects had been delayed, though they
ex-pected a large decrease in building when active
projects are completed. Residential real estate activity
decreased substantially. Showings were limited
because wide-spread shelter-in-place orders meant
homes could not be viewed publicly. One contact said
that only sales that were under contract before the
beginning of the coronavirus crisis were being completed. Nonresidential construction activity was little
changed. Contacts indicated that, as with residential
construction, most projects were continuing. A contact in
southern Wisconsin reported greater demand from
restaurants for remodeling work as owners anticipated
eventually reopening. Commercial real estate activity
decreased significantly, particularly for retail and office
spaces. Contacts noted that there was strong pressure
on landlords to give rent forbearance, but that landlords
were having difficulty obtaining forbearance from their
lenders. Contacts also noted that the commercial
property purchase process had slowed because permits
and titles were taking longer to obtain with government
workers telecommuting.
Agriculture
Income prospects for the agricultural sector deteriorated
substantially as the spread of the coronavirus led to a
dramatic fall in many commodity prices. A large drop in
ethanol prices led ethanol plants to cut production and
corn consumption, which pushed corn prices lower. The
drop in ethanol production also reduced the availability
of corn byproducts needed for nutritional balance in
corn-based animal food rations. This led livestock
operations to switch to soy-meal and helped support
soybean prices. In spite of shortages of some meat
products in stores, most livestock prices fell as demand
from restaurants and other food service providers
weakened. Milk sales declined substantially as schools
closed, but egg prices spiked. Contacts expressed
concern about the health and availability of agriculture
workers, particularly for specialty crop production.
Access to credit for farm operators was little changed,
though loan requests increased.■
Manufacturing
Manufacturing production decreased moderately on net
in late February and March. Auto production declined
substantially as the coronavirus crisis led many assemblers and suppliers to shut down. Steel production
slowed significantly, driven by large declines in autos,
oil and gas, and construction. Demand for specialty
metals decreased moderately, as reduced orders from
autos and aerospace outweighed slight increases from
the medical and defense industries. Orders for heavy
trucks continued to decline from a peak at the end of
last year. Food manufacturers reported a substantial
increase in demand, as did manufacturers of shipping
materials. Manufacturers of building materials saw a
slight increase in shipments as greater demand from
commer-cial builders more than made up for less
demand from residential builders.
G-2
For more information about District economic conditions visit:
chicagofed.org/cfsbc
Federal Reserve Bank of
St. Louis
The Beige Book ■ April 2020
Summary of Economic Activity
Economic activity has declined sharply since February. Essentially all contacts reported some degree of slowdown in
activity due to COVID-19. In the worst cases, firms are expecting zero revenue in April and possibly May. Many firms
reported moderate to severe temporary layoffs, furloughs, or paid time off. A considerable share of contacts reported
reducing employee pay, particularly the pay of salaried employees with higher-than-average wages at their firms.
Planned capital spending has been cut back at most firms to preserve cash, as even those firms in high-demand sectors
are expecting delayed payments on goods during the coming quarter. At this point, there were no reports of abrupt
cancellations of ongoing construction projects. Residential real estate conditions have held steady through March, and
District agriculture conditions improved modestly from the previous reporting period.
Employment and Wages
Prices
District firms reported moderate to severe temporary
layoffs, furloughs, or paid time off. Hotels and hospitality
contacts reported workforce reductions of around 90% of
staff. Reported reductions at specialty retailers, auto
dealers, and restaurants have ranged from 50% to 70%.
Staffing contacts reported reductions in new job openings of between 20% and 80%. Firms with a high demand for their products or services have not reported
layoffs but have experienced challenges maintaining
current employment levels. A grocer mentioned significant absenteeism; a manufacturing contact noted about
10% of its workforce required changed or reduced hours
due to school closures or other challenges. Firms also
reported difficulties and/or delays in onboarding new
employees, often relaxing or temporarily removing background checks and drug tests.
Significant changes in the demand for some products
and services and the proliferation of new product
offerings have complicated the measurement of
consumer price inflation. Restaurants have moved from
dine-in to take-out options with increasingly unique
promotions. Contacts reported increasing the prices of
necessity items, such as the price of eggs doubling.
Prices for premium food products, by contrast, seem to
be falling due to decreased demand. One grocer noted
turning unsold premium steaks into ground beef (which
was out of stock), but charging a higher price than is
typical ground sirloin. Auto dealers report significantly
lower used car prices and a greater tendency to sell new
cars for less than their sticker price.
Consumer Spending
Consumer spending activity in early March was generally
robust, followed by steep declines starting in the second
half of the month after stay-at-home regulations were
enacted. Areas in the District without these orders as
well as rural areas reported a slower rate of decline.
Restaurants and specialty retailers have generally lost at
least half of their revenue. Reports from auto dealers
were very weak; dealers generally expect March sales to
be lower than one year ago, with sales close to zero in
April.
A considerable share of contacts reported reducing
employee salaries, particularly for salaried employees
with higher-than-average wages at their firms. One
payroll firm reported that its most-affected clients have
cut salaries on non-furloughed staff between 5% and
25%. However, broad-based pay cuts have been
relatively rare, with firms prioritizing layoffs over broader
wage reductions.
H-1
Federal Reserve Bank of St. Louis
Hospitality contacts reported cancellations of nearly all
major events and conferences though June 1. Events
scheduled for later in the year are currently still in place.
Tourism venues reported strong business during the first
weeks of March, but closures brought down overall
business activity for March.
backing out of pending construction contracts due to
current uncertainty. Many contracts at this point, for both
home sales and new construction, are including language related to COVID-19.
Banking and Finance
Reports from District banks indicate substantial and
widespread increases in demand for banking services
since February. Demand for cash and for other forms of
liquid assets has increased. In early March, banks
reported that some of their larger clients were
responding to future uncertainty by drawing down on
lines of credit and depositing the funds in their checking
accounts. Demand for residential mortgages remained
elevated during the early part of March, and banks
reported strong refinancing activity. While the pipeline for
these loans remains strong, new activity has slowed and
many rates have not yet been locked.
Manufacturing
Reports from manufacturing contacts indicate declines in
overall production, but the rates of decline vary considerably by firm. A notable number of contacts (particularly
those related to autos and other durable goods) have
temporarily shut down, but manufacturers of food
products, chemicals, and medical devices continue to
operate with extremely high demand. However, these
firms are generally reporting 5% to 10% reductions in
produc-tion due to supply chain disruptions and
adjustments to workers’ arrangements. For example,
contacts report multi-day temporary shut downs for deep
cleaning, increased time between shifts for additional
cleaning, and staggering break times to reduce cafeteria
occupancy.
During the first week of April, the attention of banks
abruptly turned to the SBA/PPP loan program, with
bankers feeling overwhelmed by the program and unclear on how to approve firm applications and administer
the loans. Banks report operational difficulties as many
staff are working remotely or in decentralized branches
to protect worker health.
Nonfinancial Services
Activity in the nonfinancial services sector has worsened
since the previous report. Major hospitals in the District
report significant declines in revenue as elective
procedures are postponed due to the COVID-19
outbreak. The transportation industry has remained
relatively stable since the previous report—the exception
being passen-ger traffic, as airports report steep drops in
enplaning. Courier services report increased demand,
causing backlogs at fulfillment centers of up to one week.
Contacts in this industry report difficulty keeping facilities
adequately staffed.
Agriculture and Natural Resources
District agriculture conditions improved modestly from
the previous reporting period. The number of acres
planted in the District for corn, cotton, rice, and soybeans
increased 8% compared with last year. All states in the
District increased their number of acres planted as
planting season in 2019 was severely affected by poor
weather. Corn, rice, and soybeans were planted in
greater quantities compared with last year. Southern
parts of the District have planted fewer acres of cotton
and more of rice.
Real Estate and Construction
Residential real estate conditions have held steady
through March. Contacts report very strong sales during
the first half of the month. A contact in the St. Louis area
reported that their March sales were up 24% from one
year ago. Due to delays, many March sales are
expected to close in April. A drop in sales is expected to
occur around late April or May. Various contacts expect
this drop in sales to be somewhere between 8% and
25% relative to one year ago. One contact reported
about 5% of their existing listings were pulled off the
market during mid-March. Contacts reported decreases
in property showings of around 75% of their normal
average weekly showings from early March to the end of
March.
District contacts stated that the COVID-19 pandemic has
had a relatively muted effect on the agricultural sector to
date. Several contacts reported that farmers and
agricultural suppliers do not have current plans to reduce
output or employment at this time. Contacts cited
continued trade disputes with China, weather, commodity
prices, and deteriorating credit conditions as sources of
uncertainty for the industry. ■
Reports of residential construction activity showed little
change, as projects were generally allowed to continue.
There were reports of some, but not many, households
For more information about District economic conditions, visit:
https://research.stlouisfed.org/regecon/
H-2
Federal Reserve Bank of
Minneapolis
The Beige Book ■ April 2020
Summary of Economic Activity
Economic activity in the Ninth District fell substantially since the last report due to the COVID-19 outbreak and pandemic
response. Employment fell significantly, and wage pressures fell overall due to layoffs, while price pressures remained
modest on balance. The District economy saw declines in consumer spending, tourism, services, construction and real
estate, manufacturing, and energy. Agricultural conditions were steady at low levels.
Employment and Wages
more widespread layoffs, with the large majority
considered temporary by employers.
Employment fell significantly since the last report.
Conditions in February were quite positive, with
continued strong hiring demand across much of the
District. However, conditions changed dramatically over
the course of March with the spread of the coronavirus
and related government actions for sheltering in place
and the forced closure of many nonessential businesses.
Applications for unemployment benefits in March easily
hit record levels among all District states. Over the last
two full weeks in March, more than 225,000 workers in
Minnesota filed for unemployment, roughly 30 times the
level seen over the same period in 2019. Numerous
surveys by the Minneapolis Fed and other external
organizations found that a wide swath of firms were
laying off workers. Two District-wide surveys of firms by
the Minneapolis Fed (one in mid-March, one in early
April) found that layoffs were occurring across all
sectors, though with some variation. Cutbacks were
highest among firms in food, accommodation, entertainment, health care, and retail sectors, and lowest in
banking and finance, followed by manufacturing and
professional and technical fields. Reported workforce
cutbacks were seen among firms of all sizes, with
slightly higher percentages among small firms. Mass
layoff events tracked by District states rose, though
some states track only those related to permanent
closure, of which there were still comparatively few.
Information from Minnesota, Montana, and Wisconsin,
which track a broader set of layoffs, suggested
Wage pressure fell overall due to the unprecedented
increase in worker layoffs. Among firms cutting workers,
there were also some reports of wage freezes and cuts
for remaining workers. For certain industries seeing
strong demand—grocery chains, manufacturers of
critical equipment—there were isolated reports of wage
increases to meet customer demand and to compensate
workers for greater health risks.
Prices
Price pressures were modest on balance since the
previous report, with the notable exception of surge
pricing for some consumer goods in high demand due to
the pandemic. A large majority of respondents to a lateMarch survey of District firms reported unchanged or
only slightly increased prices for inputs and in the prices
charged for their products or services relative to a year
earlier. Manufacturing contacts reported that prices for
raw materials such as steel and plastic were stable.
Retail fuel prices fell briskly in District states relative to
the previous reporting period. Prices received by
farmers in February increased from a year earlier for
corn, soybeans, dry beans, lentils, milk, hogs, and
turkeys, while prices for wheat, chickpeas, canola, hay,
cattle, chickens, and eggs decreased.
I-1
Federal Reserve Bank of Minneapolis
Consumer Spending
Commercial real estate was lower since the last report.
Significant layoffs and slower overall activity in March
was expected to continue into the coming months,
creating upward pressure on vacancy rates and
downward pressure on leasing costs across all real
estate categories, but particularly for retail and office
space. However, the swiftness of changing market
conditions made it hard to discern the full effects across
different property categories and geographic regions.
Residential real estate was modestly lower, but varied
geographically. Home sales in rural parts of Minnesota
are reportedly “very busy—as if there was no pandemic
in place,” said an industry contact. At the same time,
Minneapolis-St. Paul and other metro centers in the state
were seeing “significantly reduced activity.”
Consumer spending declined significantly since the last
report, due to coronavirus concerns and related stay-inplace guidelines from federal and state authorities that
shut down many consumer-oriented businesses, either
directly or indirectly. Surveys of tourism and hospitality
firms in Minnesota and Montana showed notable virusrelated declines in sales already in early March, and
worsening by month’s end. Expectations from Minnesota
tourism-based businesses were for conditions to decline
further in April, which is typically the start of the busy
season for many firms. Hotel occupancy has seen a
steep decline, plunging to 17 percent in Minneapolis-St.
Paul at the end of March. Airline traffic in the District has
seen a similarly large drop in passenger demand in
March, with some airports reporting declines of 80
percent or more.
Manufacturing
Manufacturing activity in the District contracted sharply
relative to the last report. An index of manufacturing
conditions indicated substantially decreased activity in
March compared with a month earlier in Minnesota and
the Dakotas; production and employment in particular fell
sharply. A majority of manufacturers responding to a
large survey of District firms conducted in early April
reported decreased sales in March compared with the
previous months, with more than a third reporting
declines of 25 percent or greater. Impacts of the
pandemic and response on manufacturers varied by
market segment. Producers of construction materials
reported disruptions in demand as construction activity
was curtailed in some regions. However, processed food
manufacturers reported brisk increases in demand for
many products, as did suppliers of inputs to that industry.
Services
Activity in the professional services sector decreased,
though the severity varied widely. A quarter of services
firms responding to a survey reported no impact on
March sales, though nearly all of the remainder saw
modest to severe decreases. The transportation sector
saw a similarly mixed impact, with a majority of trucking
firms surveyed reporting a decline in activity due to
closures of clients, while others saw demand surge from
the grocery and other sectors.
Construction and Real Estate
Commercial construction fell since the last report, though
some underlying optimism remained. A survey of
Minnesota construction firms by the Minneapolis Fed
found that a significant number of firms had seen some
delays in existing or expected projects. The majority of
delays stemmed from concern by owners about project
viability given the virus outbreak. But delays also
stemmed from supply-chain disruptions, labor shortages,
and the lack of availability of some government
workers—due to shelter-in-place orders—for permits,
inspections, and other approvals necessary to keep
projects moving. The overall outlook of the industry has
shifted negatively, the result of both known delays and a
large amount of uncertainty about future work. However,
the designation of the industry as essential in most
District states was perceived as a boost, as was the
coming of warmer weather so more work could take
place outside of confined spaces. Residential
construction was modestly lower. In Minneapolis-St.
Paul, March single-family permits were higher compared
with a year earlier. However, the aforementioned
construction survey found that a high share of home
builders were experiencing project delays.
Agriculture, Energy and Natural Resources
District agricultural conditions were steady at low levels.
Some contacts described the COVID-19 pandemic as a
potential “perfect storm” for an already struggling rural
economy. Early reports suggested that District farmers
intended to plant less wheat and more corn and
substantially more soybean acres this year. District oil
and gas exploration activity fell moderately from the
previous report. The number of active drilling rigs as of
late March was down slightly from the last report, but
contacts in the oil-producing region of the District
reported layoffs in oil fields and substantial reductions in
capital spending. Contacts in nonferrous mining reported
that a slowdown in international demand due to the
COVID-19 outbreak in China may have abated
somewhat in recent weeks. ■
I-2
Federal Reserve Bank of
Kansas City
The Beige Book ■ April 2020
Summary of Economic Activity
After holding fairly steady in the first half of March, Tenth District economic activity deteriorated sharply later in the month
as the spread of COVID-19 negatively impacted consumer spending and business activity. Most contacts expected additional declines in the months ahead. Consumer spending slowed significantly since the previous survey, with markedly
lower sales in the auto, restaurant and tourism sectors. After some stabilization earlier this year, manufacturing activity
contracted sharply in March and expectations fell to levels last seen in early 2009. Transportation and wholesale trade
contacts reported an increase in sales, but anticipated sharply lower sales in the next few months. Professional and hightech sales declined slightly and were anticipated to fall further. Residential real estate conditions continued to hold fairly
steady, but commercial real estate conditions worsened moderately. The decline in energy activity accelerated in the
District as oil prices fell further below profitable levels. The agriculture sector weakened as cattle and corn prices fell
sharply and credit conditions worsened. District employment fell slightly in March, but layoffs and furloughs increased
significantly over the past two weeks suggesting worsening employment levels in the months ahead. Selling prices declined slightly in both the services and manufacturing sectors and additional declines were anticipated.
Employment and Wages
tacts in both the manufacturing and services sectors
expected prices to decline in the months ahead.
Respondents in the retail trade sector noted strong
growth in both input and selling prices since the previous
survey period. Contacts in the restaurant sector noted a
slight increase in input prices, while selling prices edged
down. In the transportation industry, input prices fell
moderately and selling prices declined slightly. Selling
prices held steady for construction supplies after rising in
the previous survey period. Manufacturers reported
slightly lower prices for both finished products and raw
materials prices, and anticipated modest declines in the
next few months.
District employment was down slightly in March, while
employee hours declined modestly. However, employment conditions deteriorated significantly throughout the
month, including a dramatic rise in unemployment insurance claims in the final week of the month, and contacts
expected additional declines in employment and
employee hours in the months ahead. Respondents in all
sec-tors reported lower employment levels except for
retail trade and real estate which noted modest job
gains. Similarly, retail trade and real estate, along with
health services were the only sectors with employment
above year-ago levels.
Consumer Spending
For the first time in several years, a majority of contacts
did not report labor shortages. Many respondents noted
uncertainty surrounding the spread of COVID-19, leading
them to layoff or furlough workers and to implement
hiring freezes. A majority of respondents reported that
they did not have to raise wages more than normal to
attract or keep any types of workers. Overall wages rose
slightly, but declines were expected in the months
ahead.
Consumer spending decreased significantly since the
previous survey as regional businesses were negatively
affected by COVID-19. While some retailers, like grocers
and pharmacies reported increased sales, sales were
markedly lower for the auto, restaurant and tourism
sectors. Although some health services experienced
higher levels of activity, most healthcare services firms
reported slower sales and a decline in employment
levels due to the decrease in elective procedures. Auto
sales were down substantially compared with a year
ago, and inventories were expected to rise. Restaurant
sales were significantly lower compared with the
previous survey period. Tourism sales fell sharply in
March
Prices
Input prices rose modestly and selling prices declined
slightly in the services sector, while both input and selling prices fell slightly in the manufacturing sector. Con-
J-1
Federal Reserve Bank of Kansas City
commercial and industrial loans. Loan quality was
modestly below a year ago, but was expected to
deteriorate sharply in the next six months. Cash
withdrawals increased, and bankers have been able to
meet that demand. Overall, bankers had a guarded
outlook as they kept a close watch on virus developments
and moved toward a more risk-averse position. Many
banks have moved to remote work arrangements, and
were limiting most customer interactions to drive-through
service.
and were well below year-ago levels. Over half of contacts expected lower levels of employment in 2020 due
to COVID-19 and recent market volatility, and an even
greater share of firms were concerned about cash availability.
Manufacturing and Other Business Activity
Manufacturing activity contracted sharply in March, with
declines in both durable and nondurable goods plants.
Production, new orders, employment, and raw materials
inventories all decreased compared to the previous
survey period and fell below year-ago levels. Around 60
percent of manufacturers faced delayed payments from
customers, and 54 percent had concerns about cash
availability. Expectations for future activity fell to levels
last seen in early 2009, and contacts reported putting
capital investments on hold.
Energy
District energy activity decreased at a faster pace
compared with the previous survey period. Expectations
for future drilling and business activity worsened, with
many firms not expecting rig counts or employment levels
to pick up in the near term. Revenues and profit levels
declined significantly, and most firms decreased their
plans for capital expenditures or put them on hold. The
number of active oil and gas rigs in the District fell further.
The sharp drop in commodity prices from the Saudi Russia supply shock increase coupled with the decrease
in demand due to the global COVID-19 pandemic has
weakened the outlook for energy activity. March 2020
price levels were not profitable for District contacts and if
oil prices remained below $40, respondents expected
only 60-65 percent of firms to remain solvent in the next
year.
Outside of manufacturing, firms in the transportation
sector experienced slightly higher sales, though sales
were still below year-ago levels. Sales increased moderately for wholesale trade and remained above year-ago
levels. However, sales declined slightly for professional
and high-tech services sectors compared to the previous
survey period and were down from a year-ago. Contacts
in the transportation and wholesale trade sectors anticipated significantly lower sales in the coming months, and
expectations for the professional and high-tech services
sector were also negative.
Agriculture
Real Estate and Construction
Agricultural economic conditions weakened in March.
Macroeconomic developments related to COVID-19 were
expected to put downward pressure on prices for many
agricultural commodities, despite sharp increases in
short-term demand for retail food products. Cattle prices
declined rapidly in mid-March which reduced profit
opportunities for producers. Corn prices also decreased
sharply as demand declined alongside a substantial drop
in ethanol production. Credit conditions weakened
modestly from the prior survey period, and while many
farm lenders cited uncertainty about the extent of the
impact, most expected conditions to deteriorate further in
coming months. Contacts connected to food processing
and retailing reported supply chains have been well
maintained despite rapid increases in demand. ■
Residential real estate activity generally held steady in
March, while commercial real estate conditions deteriorated moderately. Residential sales and inventories were
flat compared to the previous survey despite a typical
seasonal pickup, and were below year-ago levels. Home
prices edged up. However, sales, starts, traffic of
potential buyers, and prices were expected to decline in
the coming months. Commercial real estate activity
decreased moderately in March. Vacancy rates
increased, while absorption, completions, construction
underway and sales declined. Several contacts also
reported that access to credit had become more difficult.
Over the next few months, commercial real estate
activity was expected to deteriorate further.
Banking
District loan demand declined modestly in recent weeks,
with decreases in commercial real estate loans, commercial and industrial loans, and consumer installment
loans. Loan demand rose modestly for residential real
estate, while agriculture loan demand remained steady.
Many bankers reported tightening of credit standards,
primarily confined to commercial real estate and
For more information about District economic conditions visit:
www.KansasCityFed.org/Research/RegionalEconomy
J-2
Federal Reserve Bank of
Dallas
The Beige Book ■ April 2020
Summary of Economic Activity
There was sudden and broad-based weakening of the Eleventh District economy during the reporting period. Many
firms reported a sharp reduction in activity, resulting from business disruptions and closures due to the COVID-19
pandemic. Activity in the energy, retail, and service sectors was the hardest hit. Overall factory output and new orders
plunged, though production in food and printing-related manufacturing increased. Loan demand contracted broadly and
credit quality eroded slightly, except in residential real estate lending. Housing demand held up through mid-March but
has declined notably since then. Employment and hours worked plummeted, resulting in downward wage pressures.
Input costs were flat to down, and selling prices dipped amid declining demand for many products and services.
Outlooks worsened markedly and uncertainty surged, as the economic impact of the COVID-19 pandemic and related
containment measures intensified.
commodities rose, but pricing for most others dipped.
Input costs were flat in services and down in energy,
manufacturing, and retail.
Employment and Wages
Employment declines were steep, particularly in retail,
transportation, administrative and waste management,
and accommodation and food services, as stay-at-home
orders led to widespread business disruptions and
closures. A March Dallas Fed survey of 400 Texas
businesses in the services and manufacturing sectors
showed that one-third of respondents had either temporarily or permanently laid off workers, and 56 percent
noted that additional layoffs were likely if the situation did
not improve. Some firms noted needing financial
assistance to maintain their payrolls, while others were
adjusting hours and/or salaries. Airlines were also
offering a voluntary leave option. Energy contacts said
they expect industry employment to fall sharply in
tandem with oilfield activity. By contrast, a few firms said
they were taking this opportunity to hire due to increased
demand or a desire to bring on more qualified
employees.
Manufacturing
Factory activity deteriorated sharply in March, following a
broad-based acceleration during the previous reporting
period. Many firms noted a significant reduction in
demand and/or a rise in order cancellations, resulting
from business disruptions caused by shelter-in-place
man-dates. Some contacts also cited weak oil prices as
a headwind for growth. In contrast, pandemic-related
increased demand for food and protective equipment
boosted output in food and printing-related
manufacturing.
Refiners and chemical producers indicated softening
global demand and downward pressure on margins due
to the coronavirus pandemic. Firms noted delaying large
construction projects and lowering utilization rates as
demand for fuels dropped and inventories rose.
There were generally downward pressure on wages
outside of manufacturing and construction.
Overall outlooks turned negative, with many manufacturers expecting business activity to be adversely impacted
because of COVID-19 for at least three to six months.
Prices
Plunging demand for products and services led to widespread declines in selling prices, including for used cars
and energy. Airlines reported increasing the quota of
lower-priced tickets. Rates on rail shipments of some
K-1
Federal Reserve Bank of Dallas
Retail Sales
Financial Services
Retail sales plummeted over the reporting period as a
drop-off in consumer discretionary spending and widespread business closures—many mandated by local
governments—precipitated steep declines in revenues.
Auto sales plunged, while a few healthcare and general
merchandise stores noted higher demand. Outlooks
deteriorated notably as businesses re-evaluated plans in
the face of rising uncertainties.
Loan volumes contracted broadly, led by declines in
commercial and industrial lending. The only exception
was residential real estate loan demand, which increased during the reporting period. Loan pricing
continued its marked decline, and credit standards
tightened. Credit quality eroded across most loan types
and most bankers expect further deterioration. About 25
percent of bankers reported increased use of existing
lines of credit and 26 percent noted higher demand for
new ones, and most said they have plans in place to
meet the higher demand. Business activity tumbled, and
expectations for activity in the next six months worsened
notably.
Nonfinancial Services
Activity in the service sector was negatively affected by
the coronavirus outbreak, with firms overwhelmingly
seeing or expecting to see lower demand as customers
reduced spending and were forced to cut back or cancel
previously planned purchases or events. The few who
saw stronger demand were tied to the grocery or professional services industries which are largely able to continue operating. Accommodation and food services and
arts and recreation industries were among the hardest
hit. Airlines saw a dramatic decline in demand. Trip
cancellations were outpacing new passenger bookings,
and demand is expected to deteriorate further. Rail and
air cargo volumes decreased. Most staffing firms saw a
significant drop in orders, though there were reports of
increased demand for workers in healthcare, nursing,
and pharmaceuticals. Service sector outlooks were
largely pessimistic due to uncertainty surrounding when
things would return to normal.
Energy
Eleventh District drilling and completion activity fell
sharply toward the end of the reporting period in response to a collapse in West Texas Intermediate crude
oil prices. Many producers are evaluating which wells
need to be shut-in, particularly as physical storage
capacity for oil depletes rapidly. Firms said they are
unable to access capital through credit markets, prompting concerns about a sharp increase in bank-ruptcies.
U.S. crude production is projected to decline by year
end, but there is wide disagreement on how far it will fall.
Agriculture
Recent rainfall remedied drought conditions across most
of the district. Wheat demand and prices rose due to
increased purchases of breads and pastas during the
coronavirus pandemic. Contacts expect some farmers
will switch away from cotton to wheat or other grains this
year, as cotton prices have plummeted and could slip
further as people pare back discretionary spending on
clothing. On the livestock side, pasture conditions were
favorable and prices for cattle ready for feedlots rose
because of pandemic-related increased demand for
beef. Meat-packers have seen higher revenues in
recent weeks as grocery stores increased orders and
beef and chicken prices have risen. ■
Construction and Real Estate
Housing demand held up through mid-March, but sales
and traffic have dropped off markedly since then, particularly in Houston. Builders reported a higher-than-normal
cancellation rate, though some said they had managed
to meet their March sales goal due to strong demand in
the earlier half of the month. Showings dipped as many
sellers took their homes off the market. Several new land
and lot deals were on pause, and builders were renegotiating existing lot contracts. Outlooks weakened considerably, with sales and starts expected to slow because of
the coronavirus outbreak.
Multifamily contacts said impacts from the spread of
COVID-19 will become evident in the months ahead as
interruptions in household incomes compel many tenants
to seek relief on rent payments. Expectations are for the
low and high end of the market to be the most impacted.
Commercial leasing activity was beginning to be affected, with conditions in the retail sector deteriorating
rapidly. The investment climate is uncertain, making it
difficult to price deals. A number of land and commercial
real estate transactions have been delayed or cancelled
as investors take a wait-and-see approach.
K-2
For more information about District economic conditions visit:
www.dallasfed.org/research/texas
Federal Reserve Bank of
San Francisco
The Beige Book ■ April 2020
Summary of Economic Activity
Economic activity in the Twelfth District contracted notably during the reporting period of mid-February through March.
Many businesses reported employment or wage declines due to disruptions related to the outbreak of coronavirus
disease 2019 (COVID-19). The rate of price inflation decreased modestly. Sales of retail goods and vehicles declined
precipitously, and activity for providers of consumer and business services slowed sharply toward the end of the
reporting period. Manufacturing contracted moderately, and activity in the agriculture sector slowed somewhat.
Conditions in residential and commercial real estate were mixed, though the residential market saw slight growth on
balance. Lending declined moderately.
Employment and Wages
new construction projects were put on hold. Some contacts reported lower fuel and energy costs along with
lower airfares. Changes in prices of agricultural products
were mixed. For some growers, prices were stable with
solid demand from domestic grocery stores. Selling
prices for other growers, especially those dependent on
exporting, fell as demand from abroad remained subdued. Many businesses expected heightened slack in
the labor market going forward, eliminating any prior
upward pressure on wage and price growth. Steel manufacturers in the Pacific Northwest reported no changes in
input or selling prices. There were a few reports of price
gouging on essential household goods in short supply.
Due to disruptions stemming from the outbreak of
COVID-19, many businesses reduced employment
levels, and others scrapped plans to expand employment. Developments such as these were reported
across various skill levels and industries, though most
occurred for lower hourly wage jobs in the retail, food
services, and tourism industries. A freeze on television
and film production in the District resulted in widespread
layoffs in the entertainment sector. A major hotel chain in
Southern California put 80 percent of employees on
furlough and reduced hours for remaining employees. A
restaurant-chain owner in Seattle laid off several hundred employees. Some businesses reported no change
in employment levels but expected to have to cut jobs in
coming weeks if mandated business closures continue.
One metal manufacturer in the Pacific Northwest anticipated reducing payrolls as new orders have declined
significantly. A financial technology company in Northern
California put on hold a plan to hire 1,500 additional staff
members.
Retail Trade and Services
Wages declined at some employers. The Southern
California hotel company also cut managers’ pay 10 to
15 percent in response to a severe decline in occupancy
rates. A building supplies manufacturer in Northern
California cut wages somewhat to contain costs. One
restaurant chain in Washington reported salary cuts of
up to 20 percent for office and administrative staff.
Prices
The rate of price inflation decreased a bit. Prices for
building materials declined moderately on balance as
L-1
With few exceptions, contacts reported that sales of
retail goods and vehicles declined precipitously on net
over the reporting period; this decrease was due to
mandated closures of nonessential businesses in all
District states in mid- to late-March in response to the
spread of COVID-19. Activity came to a standstill for
most retailers in California, Hawaii, Idaho and Washington, with exceptions reported for grocery stores and
some building product retailers. In Idaho, vehicle sales
along with sales of parts and accessories fell from a solid
level in late-February and early-March to near zero in
mid-March. Some business owners anticipated that retail
sales will decline further as job losses decrease incomes. Additionally, lasting impacts of the COVID-19
outbreak could accelerate the trend towards online
sales, hurting small retailers with brick-and-mortar stores.
Many respondents deemed concessionary government
Federal Reserve Bank of San Francisco
loans essential to prevent widespread small business
closures.
some businesses. A contact in Eastern Washington
noted that production could be disrupted if the flow of
migrant workers from Mexico is impacted by restrictions
on Mexico-U.S. border crossings. On the export side,
fruit and nut growers in California have seen continued
weak demand from China, though wheat growers in
Idaho saw an increase in new orders from China in the
past few weeks. In general, contacts noted that the
strong dollar also hampered export sales.
Activity for providers of consumer and business services
also declined sharply toward the end of the reporting
period. Restaurant sales fell sharply. Pivots to take-out
operations did not compensate for lost dine-in revenue.
A hotelier in Southern California reported that occupancy
rates entered free fall in mid-March, and many hotels
decided to close temporarily. This contact had previously
expected stable growth in the first quarter of the year.
The tourism industry in Hawaii essentially shut down in
March, a blow to the state’s economy. A major shipping
and logistics company reported that small business
shipments slowed markedly, and international volumes
fell by almost half. Home deliveries from big box stores
held solid though. Television and film production in
Southern California halted. A contact in the health-care
industry in Nevada reported that providers were facing
limited supplies of essential items like masks, gowns,
and ventilators and have been forced to begin rationing
care for COVID-19 patients.
Real Estate and Construction
Residential real estate activity was mixed but grew
slightly on balance. Contacts reported that most inprogress home building continued throughout March,
while the future status of residential construction vis-àvis nonessential business closures was unclear. In most
states, construction is expected to continue, though the
demand outlook for new residential projects is highly
uncertain. Reports also painted a mixed picture of sales
activity in the District. Buyer response to the COVID-19
outbreak varied by local market as did local government
restrictions on selling. Some reports for Idaho, Oregon,
California, and Washington indicated that sales activity
and prices were stable around recent levels. Other
reports for Idaho and California indicated that sales fell
severely in the second half of March.
Manufacturing
Activity in the manufacturing sector contracted moderately. Most manufacturers, while still operating, noted
that the supply chains that deliver raw material inputs
have been negatively affected by the outbreak of COVID
-19. A contact in Southern California reported that manufacturers of components for renewable energy production
have seen decreases in the supply of raw materials. A
metal fabricator in Oregon had a healthy backlog of orders
but noted emerging difficulties in obtaining inputs and a
decline in new orders. A building products manu-facturer
in the Mountain West saw a severe drop in demand from
retailers, who instead bought in smaller quantities from
intermediary wholesalers.
Conditions in commercial real estate markets were
mixed. In Southern California, major infrastructure
projects proceeded amidst the statewide shelter-in-place
order though some reports emphasized that continuation
depends on maintaining a healthy workforce. In the
Mountain West, commercial projects generally
proceeded though new project proposals declined
noticeably. Some reports highlighted the potential for
building owners to face strain if commercial tenants are
unable to make rental payments.
Agriculture and Resource-Related Industries
Financial Institutions
Activity in the agriculture sector slowed somewhat as
growers grappled with disruptions due to the COVID-19
outbreak. Several contacts noted that most agriculture
businesses in states with shelter-in-place orders, like
California and Washington, were designated as
“essential” and allowed to continue operations. Therefore,
some farming contacts in Central California and Eastern
Washington reported that activity was broadly stable,
sales to grocery stores were solid, and production inputs
and labor supply were generally available. However, a
bulk food producer and distributor noted that starting in
mid-March sales to restaurants across the District were
virtually nonexistent. Washington fruit growers and Idaho
corn growers saw a noticeable decline in domestic
demand, which has severely jeopardized profitability for
Lending activity declined moderately amidst ample
liquidity. Reports noted that new loan origination fell
sharply, and many banks received payment deferral
requests from small business borrowers. Several banks
readied emergency credit lines and expected credit
quality to deteriorate as broad economic conditions turn
for the worse. A few lenders expressed concern that new
government lending programs would not allow speedy
distribution of funds to small businesses. Venture capital
investing slowed severely and investors are expected to
become highly selective regarding new funding
opportunities. Home mortgage refinancing activity was
robust following decreases in the federal funds rate in
early March. ■
L-2
Cite this document
Federal Reserve (2020, April 28). Beige Book. Beige Book, Federal Reserve. https://whenthefedspeaks.com/doc/beige_book_20200429
@misc{wtfs_beige_book_20200429,
author = {Federal Reserve},
title = {Beige Book},
year = {2020},
month = {Apr},
howpublished = {Beige Book, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/beige_book_20200429},
note = {Retrieved via When the Fed Speaks corpus}
}