Beige Book
For use at 2:00 PM EST
Wednesday
December 2, 2020
The Beige Book
Summary of Commentary on Current Economic Conditions
By Federal Reserve District
November 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 Philadelphia
based on information collected on or before November 20, 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 ■ November 2020
Overall Economic Activity
Most Federal Reserve Districts have characterized economic expansion as modest or moderate since the prior Beige
Book period. However, four Districts described little or no growth, and five narratives noted that activity remained below
pre-pandemic levels for at least some sectors. Moreover, Philadelphia and three of the four Midwestern Districts
observed that activity began to slow in early November as COVID-19 cases surged. Reports tended to indicate higherthan-average growth of manufacturing, distribution and logistics, homebuilding, and existing home sales, although not
without disruptions. Banking contacts in numerous Districts reported some deterioration of loan portfolios, particularly
for commercial lending into the retail and leisure and hospitality sectors. An increase in delinquencies in 2021 is more
widely anticipated. Most Districts reported that firms’ outlooks remained positive; however, optimism has waned – many
contacts cited concerns over the recent pandemic wave, mandated restrictions (recent and prospective), and the
looming expiration dates for unemployment benefits and for moratoriums on evictions and foreclosures.
Employment and Wages
Nearly all Districts reported that employment rose, but for most, the pace was slow, at best, and the recovery remained
incomplete. Firms that were hiring continued to report difficulties in attracting and retaining workers. Many contacts
noted that the sharp rise in COVID-19 cases had precipitated more school and plant closings and renewed fears of
infection, which have further aggravated labor supply problems, including absenteeism and attrition. Providing for childcare and virtual schooling needs was widely cited as a significant and growing issue for the workforce, especially for
women – prompting some firms to extend greater accommodations for flexible work schedules. In several Districts,
firms feared that employment levels would fall over the winter before recovering further. Despite hiring difficulties, firms
in most Districts reported that wages grew at a slight or modest pace overall. However, many noted greater pressure to
raise rates for low-skilled workers, especially in outlying areas. Staffing firms described greater placement success with
competitive rates, and one firm instituted a minimum wage rate for its industrial clients.
Prices
In most Districts, firms reported modest to moderate increases of input prices, while the selling prices of final goods
rose at a slight to modest pace. Contacts noted that COVID-19 cases have caused ongoing disruptions and delays
among short-staffed producers and shippers – raising transportation costs, which are then passed through to buyers.
Highlights by Federal Reserve District
Boston
New York
Manufacturers reported increased revenues from a year
ago, including some strong gains. Retailers and staffing
firms continued recovering toward pre-pandemic levels,
while the hospitality and tourism sectors remained hardhit. Uncertainty about the course of the pandemic, vaccines, and possible relief measures added caution to
positive outlooks.
The regional economy has been flat, and the labor market has remained weak. Manufacturing growth slowed,
consumer spending and tourism were little changed, and
a number of service industries saw declines in activity.
Commercial real estate softened further, but most residential sales markets continued to show strength.
Wages and other business input costs picked up modestly, while selling prices were little changed.
1
National Summary
Philadelphia
St. Louis
Business activity held steady during the current Beige
Book period and remained below levels attained prior to
the onset of COVID-19. However, sharply rising COVID19 cases triggered a downward trend in early November
and heightened concerns over anticipated layoffs, foreclosures, evictions, and bankruptcies. Meanwhile, modest job growth, slight wage growth, and modest inflation
continued.
Reports from District contacts suggest economic activity
has continued to increase slightly since our previous
report; however, conditions deteriorated toward the end
of the reporting period. The overall outlook for business
conditions over the next 12 months has improved but
remains slightly pessimistic.
Minneapolis
District economic activity grew moderately. Employment
rose modestly, but obstacles such as child care availability and virtual schooling for households with children
impacted labor participation, particularly among women.
Consumer spending grew slightly, with softening demand in some segments due to rising COVID-19 infections. Manufacturers generally saw brisk growth. Agricultural conditions improved slightly.
Cleveland
Economic activity increased moderately, and staff levels
increased slightly. Firms connected to IT, housing, and
consumer durables fared better than those connected to
travel, energy, and hospitality. Supply chain constraints
boosted transportation costs and prices for certain construction and manufacturing inputs. Contacts expected a
modest improvement in activity, but hiring plans were
restrained because of the pandemic’s uncertain path.
Kansas City
Economic activity continued to expand slightly. After rising in October, consumer spending fell slightly in November but was expected to bounce back in the coming
months. Contacts in the manufacturing, residential real
estate, wholesale trade, transportation, and professional
and high-tech services sectors all reported increased
levels of activity. In addition, the energy sector held
steady, and the agriculture sector improved moderately.
Richmond
The regional economy grew moderately in recent weeks.
Employment rose and demand for some professional
business occupations was strong. Wage and price
growth were modest. The housing market remained
robust, and commercial real estate leasing improved
somewhat. Port and trucking volumes reached robust
levels and manufacturing activity picked up.
Dallas
Atlanta
Economic activity expanded modestly. Growth moderated in the manufacturing, retail, and services sectors. The
housing market continued to outperform expectations,
but office leasing remained weak. Energy activity remained depressed though it showed further signs of
improvement. Outlooks were positive, though highly
uncertain due to looming concerns surrounding political
uncertainty and the unknown course of the pandemic.
District economic activity modestly expanded. Labor
markets continued to improve. Contacts noted some
nonlabor costs rose. Retail activity and auto sales were
mixed. Activity in tourism and hospitality picked up slightly. Residential real estate demand was strong and home
prices rose. Commercial real estate conditions remained
challenged. Manufacturing activity increased. Conditions
at financial institutions stabilized.
San Francisco
Chicago
Economic activity in the District expanded modestly.
Employment levels increased slightly, while price inflation showed little change. Sales of retail goods rose
appreciably, but conditions in the services sector were
unchanged. Manufacturing expanded moderately, and
the agriculture sector improved slightly. Residential real
estate activity continued to grow, while commercial
markets changed little. Lending activity increased mildly.
Economic activity increased moderately but remained
below its pre-pandemic level. Employment, consumer
spending, and manufacturing increased moderately;
business spending increased modestly; and construction
and real estate was flat. Wages rose slightly, as did
prices. Financial conditions improved modestly. Strong
harvests, government support, and higher prices boosted expectations for farm income.
2
Federal Reserve Bank of
Boston
The Beige Book ■ November 2020
Summary of Economic Activity
Economic activity continued to expand in the First District in October and early November. Most manufacturers cited
increases in revenues in recent weeks compared with a year earlier. Tourism and hospitality remained in the doldrums,
while brick and mortar retailers saw gains from earlier in the year. Staffing firms’ revenues were down from a year ago,
but they too cited quarter-over-quarter improvements. Real estate markets for industrial and lab space continued strong
even as the office and retail real estate markets remained weak. Residential real estate markets across the region continued to experience increases in both sales and prices. Reports on the labor market were mixed. Most responding firms
cited cautiously optimistic outlooks, with continued uncertainty.
Employment and Wages
Retail and Tourism
Labor market conditions varied by sector. Many hotel
workers across the region remained furloughed, particularly staff that worked larger functions. Most manufacturing respondents said they were hiring; some reported
difficulty finding workers but others did not. A supplier to
commercial aviation announced major layoffs over the
summer and has not had any reason to revise those
plans either up or down since then. Staffing companies,
while noting increased business, reported that the supply
of labor continued to be a challenge. They cited a number of reasons for a shortage of workers: limited or lack
of access to daycare and school, worries about contracting COVID-19, mandatory 14-day quarantines, and
potential further shutdowns. Staffing firms’ bill and pay
rates have gone up considerably since the pandemic hit,
but some companies said the rates had begun reversing
toward their pre-pandemic levels.
Retail contacts noted improvements in brick and mortar
store sales compared to the first half of 2020, though
tourism and hospitality respondents continued to report
major disruptions related to COVID-19. After limited inperson shopping in the second quarter, one retailer’s
same-store sales were off just 5 percent—exceeding
expectations—across August, September, and October
compared to the same period in 2019, with home décor
and furnishings doing best. Another retail contact reported sales improved more than anticipated from the spring,
but were down by mid-single digits from a year ago.
Restaurants across Massachusetts benefited from a dry
summer and start of fall, but as temperatures declined,
outdoor dining and average sales dropped. At the same
time, COVID-19 cases increased and new restrictions
were imposed, both of which contacts suspected raised
concerns with indoor dining. Many restaurants that used
tented spaces to increase social-distanced table capacity
this fall reported that heating constraints will shut down
those spaces as winter approaches. Restaurants in
Boston continued to fare the worst in the state, on average, and some will close for the winter, as operating at
reduced capacity would lead to greater losses.
Prices
Contacts cited limited concerns about prices. Average
nightly hotel prices in Boston dropped 45 percent compared to 2019 reflecting extremely low occupancy. Manufacturers said pricing pressures were generally muted.
Nonetheless, a chemical maker said prices of some bulk
chemicals had spiked due to demand for PPE and the
recovery in China. Several manufacturers registered cost
concerns regarding the availability of transportation both
locally and around the world.
Travel industry contacts reported that hotel stays were
still significantly impacted by the pandemic; hotel occupancy in Boston was under 30 percent as compared with
A-1
Federal Reserve Bank of Boston
a 2019 average over 80 percent. Conventions scheduled
in Boston through July 2021 have been postponed.
science sector, one contact reported that around 5 million square feet of lab space is underway to be delivered
by the end of 2025 in greater Boston, with about 40
percent of it pre-leased.
Manufacturing and Related Services
All but one of 11 contacted manufacturers reported
increased sales versus a year earlier. The lone exception has large exposure to commercial aviation and
autos, with commercial aviation down 40 percent to 50
percent and autos down 10 percent to 15 percent. By
contrast, some contacts reported strong gains, including
a manufacturer of testing equipment who said sales
were up 35 percent and a semiconductor equipment
supplier with a 45 percent increase. A manufacturer of
ventilators cited $400 million in orders as compared to
$20 million in a normal year. A supplier of products to
veterinarians said that demand was up partly because
the number of pet owners has increased during the
pandemic.
With very little leasing activity in the office sector, tenants
nearing the end of their leases were renewing only for
the short term. Some respondents reported an increase
in available office sublease space, indicating more officemarket problems to come. Retail properties continued
struggling, with grocery and big-box stores the only
successes. Contacts estimated daytime office occupancy rates at around 20 percent—bad news for the shops
and restaurants that relied on office workers’ business.
Regarding the outlook, contacts expressed cautious
optimism, with positive vaccine news and the election
behind them. Many expected Q1 2021 to be tough, with
the pandemic picking up again and uncertainty about
future stimulus measures, but they were hopeful about
the second half of 2021.
Capital expenditures were generally up but several contacts reported delays in delivery of capital goods. No one
reported any issues with financing. Most contacts had
not made major capital investments in response to high
demand because they viewed it as temporary.
Residential Real Estate
Staffing Services
The First District saw high sales numbers in September
or October, as pent-up demand from the delayed spring
market and eagerness to take advantage of historically
low mortgage rates overpowered the usual fall slowdown. (Connecticut data were unavailable. Boston and
Maine reported changes from October 2019 to October
2020; all other areas reported changes through September 2020.)
New England staffing firms reported positive growth in
Q3 regardless of their industry exposure. Quarter-overquarter growth rates ranged from 10 percent to 15 percent for firms that shared numbers. By early Q4, a few
companies enjoyed levels of business activity similar to
their pre-COVID ones. All contacts remarked that business volume was still down compared to a year ago,
citing numbers from -8 percent to -40 percent. All reported that business has steadily regained momentum since
July, with the demand for labor strong. One contact had
shifted to placing essential workers due to higher demand. In general, staffing firms were more optimistic
now than they were in August. They expect modest
slowdowns next quarter but quick recovery in the following quarters of 2021.
The number of closed sales increased in all reporting
areas from a year ago, with double-digit increases for all
markets except Boston condos. Notwithstanding these
unusually high sales numbers, severe inventory shortages continued; the inventory of homes for sale dropped by
double-digit percentages from a year ago in all reporting
markets except Boston condos. The lack of inventory
and high buyer demand continued to put upward pressure on prices and, once again, the median sale price
rose in all markets, with double-digit increases for single
family homes. Contacts expected this “buying frenzy” to
continue through the winter months. The Massachusetts
contact again mentioned movement from urban areas to
suburban and rural areas, and the Maine contact noted a
substantial influx of out-of-state buyers.■
Manufacturers generally reported positive outlooks,
albeit with some caution because of uncertainty about
both the path of the pandemic and the timing of vaccines.
Commercial Real Estate
Conditions in First District leasing markets have not
changed appreciably since the last report. Industrial and
lab space continued to do well, while retail and office
space continued to suffer. Much industrial activity was
related to e-commerce and last-mile fulfillment. Construction activity in the industrial market was somewhat
restrained by increased construction costs. In the life-
For more information about District economic conditions visit:
www.bostonfed.org/regional-economy
A-2
Federal Reserve Bank of
New York
The Beige Book ■ November 2020
Summary of Economic Activity
Economic activity in the Second District economy was flat in the latest reporting period. The labor market has remained
weak, with employment in most industry sectors essentially unchanged. Input prices continued to rise moderately, while
selling prices were little changed. Consumer spending has been little changed at subdued levels, while tourism has
remained depressed. Housing markets have continued to strengthen, except in New York City, while markets for office
and retail space have continued to soften. Finally, banks reported little change in loan demand, tighter credit standards,
and an upturn in delinquency rates. Overall, business contacts have become less optimistic about the near-term outlook, with many contacts mentioning the recent pandemic wave, increased restrictions, and political uncertainty as major
challenges.
wages to accelerate somewhat—particularly in the trade
& transportation and education & health sectors.
Employment and Wages
The labor market has remained weak, with employment
levels little changed in recent weeks. A major New York
City employment agency reported that hiring has remained moribund and anticipated a rough patch through
the winter but expressed hope for a pickup later in 2021.
An upstate agency, on the other hand, indicated scattered signs of a pickup in hiring, especially for lowerwage workers, and noted particular difficulty in recruiting
customer-service representatives. Despite the weak
labor market, a number of business contacts have struggled to hire and retain skilled workers.
Prices
Business contacts have reported somewhat more upward pressure on input prices in recent weeks. Businesses in manufacturing, distribution, education &
health, and leisure & hospitality have generally noted
more widespread escalation than those in other sectors.
Construction contacts, on the other hand, reported
somewhat less pronounced cost pressures than previously. Some business contacts have noted a pronounced acceleration in health coverage costs for 2021.
Businesses in many service industries—leisure & hospitality, education & health, wholesale trade, and information—reported flat to declining employment. However,
manufacturers and retailers, on balance, reported modest increases in staff. Business contacts in most sectors
said they plan to leave staffing levels at or near current
levels in the months ahead, with the notable exception of
construction, where considerably more businesses plan
to reduce than expand employment.
Regarding selling prices, retailers, distributors, and manufacturers reported some increases, but businesses in
other sectors indicated that selling prices remained
steady. Looking ahead, there has been a further modest
increase in the proportion of businesses planning to
raise their selling prices in the next few months—most
notably in the retail and manufacturing sectors.
Consumer Spending
Consumer spending has been mostly flat since the last
report. Retailers reported that sales have been steady to
somewhat lower in recent weeks, with business remaining well below pre-pandemic levels. Stores in upstate
New York continued to outperform those in other areas.
Wages have picked up modestly, according to business
contacts across a wide spectrum of industries. Moreover,
an upstate New York employment agency noted a particular upward trend in wages at the lower end of the pay
scale. Looking ahead, businesses generally expect
B-1
Federal Reserve Bank of New York
areas around New York City, sales activity has been
brisk, home prices have risen strongly, and the inventory
of unsold homes has declined further. In New York City,
conditions have been more mixed. Rental markets have
weakened further: with increased landlord concessions,
effective rents are reported to be down 15 percent from a
year ago in both Manhattan and nearby Queens and
down 5 percent in Brooklyn, as vacancy rates have
climbed. The co-op and condo sales market has been
more stable, with prices declining moderately in Manhattan but holding mostly steady in Brooklyn.
New vehicle sales were flat to down slightly, according to
dealers in upstate New York, with the weakness attributed to a combination of low inventories, reduced dealer
incentives, and some pullback in demand. Sales of used
vehicles have been steady, also hampered by lean inventories. Consumer confidence among residents of the
Middle Atlantic region (NY, NJ, PA) retreated in October
and remains moderately below pre-pandemic levels.
Manufacturing and Distribution
Manufacturing growth has slowed to a subdued pace in
the latest reporting period. In contrast, wholesale trade
firms continued to report moderate growth, and businesses engaged in transportation & warehousing reported some pickup in activity.
Commercial real estate markets have weakened further.
Office availability and vacancy rates have continued to
rise across the District, while asking rents declined in
New York City but were steady to higher across the rest
of the District. Retail vacancies have continued to increase across the District. Asking rents for retail space
have fallen sharply in New York City but have been flat
to down modestly in other areas.
Looking ahead, manufacturers have remained fairly
optimistic about the outlook, while wholesalers’ optimism
has waned, and transportation & warehousing contacts
have continued to be broadly pessimistic.
Services
New construction activity has remained sluggish and well
below year-earlier levels for both residential and commercial structures. Contacts in the construction industry
reported weakening activity and have grown increasingly
pessimistic about the near-term outlook. One contact
noted clogged supply chains as a major problem and
attributed this partly to reduced availability of credit.
Service industry contacts generally reported that business activity has weakened noticeably in the latest reporting period. Contacts in the professional & business
services and leisure & hospitality sectors reported widespread declines in activity, while those in the information
and education & health sectors indicated more moderate
declines. Looking ahead, professional & business service firms expressed mild optimism about prospects for
the months ahead, whereas leisure & hospitality firms
expressed increased concern that conditions would
deteriorate.
Banking and Finance
Contacts in the finance sector generally continued to
report steady to declining business activity but have
grown less pessimistic about the near-term outlook.
Small to medium-sized banks in the District reported little
change in overall loan demand, with increased demand
for residential mortgages but decreased demand for
commercial and industrial (C&I) loans. Refinancing activity increased. Bankers reported tightened credit standards across all categories. Spreads narrowed on all loan
categories except C&I, where spreads were unchanged.
Finally, bankers reported higher delinquency rates
across all loan segments except commercial mortgages
where delinquency rates held steady. Bankers reported
no change in the degree of leniency on delinquent accounts across all categories. ■
Tourism, which had picked up somewhat in the previous
reporting period, has more recently shown signs of
weakening. A number of contacts attribute this to the
recent wave of the pandemic across the nation and
much of the world, as well as the onset of cold weather,
which limits outdoor activities. An authority on New York
City’s tourism sector noted that most recent visitations
have been short haul trips. Hotel occupancy rates have
been noticeably higher on weekends than weekdays but
are still well below 50 percent, and room rates are down
sharply. Many city hotels are picking up some of the
slack with alternative uses, such as providing shelter for
the homeless. Advance bookings for the holiday season
suggest only a modest uptick. While tourism is expected
to rebound noticeably in 2021, it is projected to remain
25-30 percent below pre-pandemic levels, as the international and business segments are expected to lag.
Real Estate and Construction
For more information about District economic conditions visit:
www.newyorkfed.org/regional-economy
Housing markets have continued to strengthen across
much of the District. In both upstate New York and the
B-2
Federal Reserve Bank of
Philadelphia
The Beige Book ■ November 2020
Summary of Economic Activity
On balance, Third District business activity held steady for most of the current Beige Book period and remained below
levels observed prior to the onset of the COVID-19 pandemic in most sectors. Net employment continued to grow modestly, wages continued to grow slightly, and price increases remained modest. However, numerous contacts noted that
the sharp rise in COVID-19 cases had disrupted economic activity, and a downward trend emerged as November began. The cases heightened concerns that the winter months would prove difficult, if not impossible, to survive for some
firms. Bankruptcies have already begun within the retail, restaurant, and hospitality sectors. Contacts are concerned that
when unemployment benefits and moratoriums on evictions and foreclosures expire, an avalanche of bankruptcies will
emerge among other small and medium-sized businesses, as well as households. Positive expectations for growth over
the next six months have narrowed among firms.
Employment and Wages
percent of the manufacturers reported that prices rose
for factor inputs (and none reported a decline), but only
about 25 percent received higher prices for their own
products. In turn, about 25 percent of the nonmanufacturers reported that prices rose for their inputs, but only
about 10 percent received higher prices from consumers
for their own goods and services (and 6 percent reported
declines). Generally, well over half of all firms noted no
change in prices.
Employment continued to increase modestly overall. The
share of manufacturers reporting employment increases
held steady at one-third, while the share reporting declines fell. Among nonmanufacturing firms, the share
reporting increases has risen since the prior period,
while the share reporting decreases held steady. On
balance, average hours worked rose across all firms.
Activity at staffing firms remained below pre-pandemic
levels, with most firms noting more openings than candidates. Firms have more success at placements for those
clients willing to pay competitive wages. Even in outlying
areas of the District, this often means that firms seeking
workers for low-skilled jobs must compete with billboard
advertisements by warehouses for positions that start at
$15 an hour and higher. Rising COVID-19 cases and
sporadic school closings continue to deter workers,
especially women, from reentering the labor market.
Various contacts noted that supply disruptions, shortages, and price spikes were easing. However, as
COVID-19 cases surged, more businesses were coping
with sporadic shutdowns and labor shortages, and many
feared worse conditions in the winter months ahead.
Looking ahead one year, manufacturers now anticipate
receiving prices for their own goods and services that
are modestly higher than they expected one quarter
earlier. However, nonmanufacturing firms have raised
their expectations significantly. Overall, firms also reported slightly higher expectations for annual consumer
inflation.
Wages continued to grow slightly. In mid-November, the
percentage of nonmanufacturing firms reporting higher
wage and benefit costs per employee remained somewhat higher than the percentage reporting lower costs.
However, two-thirds of the firms reported no change.
Manufacturing
On average, manufacturing activity continued to grow
slightly over the prior period; however, the trend softened
in early November. The diffusion indexes for shipments
Prices
Prices continued to rise modestly overall. Nearly 40
C-1
Federal Reserve Bank of Philadelphia
and for new orders from our mid-month surveys in October and November remained positive – suggesting some
growth. However, the indexes rose from September to
October, then fell in November.
November, firms reported demand was nearer to 19
percent below pre-pandemic expectations.
The diffusion indexes for new orders and sales from our
mid-month surveys also suggested slight declines. Both
indexes have fallen into negative territory since midSeptember, indicating that declines were somewhat
more widespread among firms and that the overall direction of change was no longer positive.
Manufacturing firms responding to a question drawn
from our COVID-19 survey reported that sales and new
orders were about 8 percent below what had been anticipated pre-pandemic – the same as was reported at the
end of September.
Financial Services
One contact with a diverse and global footprint noted
that U.S. manufacturing softened at the beginning of
November, as had manufacturing in Europe after
COVID-19 cases began rising. In contrast, cases are few
in China, and activity is holding steady. Although China’s
economy would be expected to slow as global demand
wanes, the contact noted that some production has
shifted back to Chinese facilities – free of virus-induced
disruptions.
The volume of bank lending fell modestly during the
period (not seasonally adjusted); in the same period in
2019, by contrast, loan volumes grew modestly. Residential mortgages grew modestly but were offset by
modest declines in home equity lines, auto loans, and
other consumer loans. Commercial real estate lending
was flat, and commercial and industrial loans fell sharply
again as Paycheck Protection Program loans continued
to roll off the books. Credit card volumes fell moderately;
last year, they grew modestly over the same period.
Consumer Spending
Nonauto retail sales appeared to edge lower beginning
in late October. Contacts cited rising COVID-19 cases
and falling temperatures as contributing factors. Rising
caseloads worried consumers and disrupted purveyors
with staff shortages and sporadic closures. Sales held
steady for some firms but still disappointed, since holiday
shopping (and eating out) would typically have begun to
boost brick-and-mortar sales.
Banking contacts, as well as accountants and attorneys,
continued to note little change in delinquencies or other
credit problems, except in the retail, restaurant, and
hospitality sectors. However, concerns remained that
significant problems will arise as moratoriums on evictions and foreclosures expire and unemployment benefits end.
Auto dealers continued to report strong consumer demand for new and used autos; however, the growth rate
in new car sales remained modest on average. Dealers
noted that inventory problems had mostly cleared and
that margins were greater, as labor expense was lower
and terms with manufacturers were more favorable.
Homebuilders reported moderate sales growth in which
demand continues to outpace the availability of land and
labor. Raising prices has helped builders to slow demand and cover rising costs. Existing home sales have
also grown moderately – relative to very low levels from
the prior year. Inventory levels remain extremely low;
however, the recent high demand for homes may be
depressing inventory levels because new listings are
snapped up so quickly.
Real Estate and Construction
Contacts noted that leisure travel held up later into the
fall, but business travel and group travel picked up less
than usual. Shore destinations reported better-thannormal activity well into October. However, overall tourism remained at almost half of prior-year levels and
appeared to decline slightly at the end of October. A
hotel contact expects a tough winter for the industry and
has already observed more “jingle mail” – when the
operator sends the keys to the lender.
Philadelphia’s commercial construction activity held
steady at about 13 percent below the level of activity
anticipated before the pandemic. The existing pipeline of
construction should keep activity steady through the first
half of 2021. Commercial office leasing activity has fallen
moderately in the suburbs and in central business districts. Demand remained strong for warehousing construction and leasing. ■
Nonfinancial Services
On balance, nonmanufacturing activity has fallen slightly
since the prior period. In responding to a question from
our COVID-19 survey at the end of September, nonmanufacturers had reported that sales and new orders were
about 16 percent below what had been anticipated prepandemic. In our mid-month surveys for October and
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 Ŷ November 2020
Summary of Economic Activity
Economic activity increased moderately and at a similar pace to the previous reporting period. Activity increased at a
brisk pace for professional services, freight haulers, and firms whose sales benefitted from low interest rates (such as
homebuilders and durable goods producers). Firms in industries that were most impacted by the pandemic (such as
hospitality, aerospace, and energy) saw little improvement in demand. Staff levels increased slightly as customer demand improved. However, most firms were still below pre-pandemic staff levels. Although labor availability had improved recently, many firms report ongoing difficulty finding workers. Idiosyncratic disruptions to production as well as
shipping delays pushed up transportation rates and costs for certain construction and manufacturing inputs. Selling
prices rose moderately as a result. Looking ahead, contacts expected modest improvement in customer demand, although expectations have been tempered since the previous reporting period because of the uncertainty of the coronavirus’s path. Consequently, outlooks for hiring in the year ahead were also restrained.
Employment and Wages
virus and associated public health measures topped the
reasons firms are reticent to add staff. Moreover, a sizable share of firms indicated they expected sales growth
to be too low to justify stronger hiring.
District labor markets continue to heal steadily. Staff
levels increased slightly in response to the broader
improvement in business activity. Most firms that had
temporarily laid off workers have rehired most of those
workers. That said, staff levels remain below prepandemic levels for about two-thirds of our contacts.
Also, despite high levels of unemployment, firms experienced mixed results in recruiting workers. Firms generally had no trouble finding workers for office-type jobs, but
recruitment was still a challenge for many manufacturing,
construction, retail, and transportation firms. Firms in
these sectors indicated that, although labor availability
has improved with the passage of time since supplemental unemployment benefits lapsed in July, their
staffing challenges have persisted.
Prices
Nonlabor costs rose moderately, on balance. However,
cost increases were more prominent for builders, manufacturers, and retailers. Many firms in these sectors
experienced delays in receiving inputs because either
the producer or the shipper was short-staffed. This situation not only increased input costs and the cost of shipping these materials, but it also increased lead times.
Steel and lumber were widely cited as examples of commodities for which prices are well above pre-pandemic
levels.
Selling prices rose moderately, although increases were
stronger for durable goods and freight than they were for
professional services and nondurable goods. Very strong
demand and tight capacity in the industry motivated
almost all of our freight haulers to boost their rates for
new contracts, and most received little pushback from
customers. A number of manufacturers and builders
were able to pass cost increases on to their customers if
they were not held to a long-term contract. Auto dealers
commented that low inventories of vehicles continue to
Overall, wage pressures were modest because of the
slack in the labor market. The freight and logistics sector
was an exception. Many of these firms reported pay
increases of 10 percent or more for drivers and hourly
workers to attract workers and to stem high employee
turnover.
Regarding the outlook, hiring plans for the year ahead
were generally modest. About a third of contacts expected they will still be below pre-pandemic staff levels
12 months from now. Uncertainty about the path of the
D-1
Federal Reserve Bank of Cleveland
push up prices for new and used cars. By contrast, a
number of restaurants and hotels cut their prices to
attract customers. Professional services firms broadly
held their prices, as they have done for several reporting
periods.
soften.
Nonresidential construction and real estate activity remained relatively stable since our last report. Increases
in COVID-19 infections and uncertainty about the elections led many firms to hold off on their investments. One
general contractor stated that there have been fewer
projects available for bidding and those that are available
have been smaller in dollar value. He also noted that
many projects have seen a significantly larger pool of
bidders than usual.
Consumer Spending
Reports suggest that consumer spending grew moderately, albeit at a slower pace than in the last reporting
period. Sales of goods were generally stronger than for
services. Auto dealers commented that sales remained
strong, thanks largely to low interest rates, and while
some reported improved inventory levels, a number of
contacts indicated that sales were still being limited by
low inventories. Sales for general merchandisers and
apparel retailers were slightly better recently, and they
were expecting a favorable holiday shopping season.
However, hoteliers and restauranteurs noted that the
recent rise in COVID-19 cases weakened dine-in sales
and business travel further from its previous low level,
and customers were cancelling planned weddings and
holiday events. Contacts expected business activity to
remain broadly unchanged in the next few months, although increases in COVID-19 infections and diminished
assistance to households from federal programs were
significant downside risks to the outlook for spending.
Financial Services
Banking activity remained stable during the reporting
period. Contacts noted that low interest rates continued
to support demand for consumer loans, especially for
mortgages and auto loans. However, demand for business loans was reportedly flat. Core deposits grew for
most contacts, and lenders indicated that delinquency
rates for commercial and consumer loans were still low
because of forbearance agreements and CARES Actrelated assistance. One banker noted that customers for
whom forbearance agreements had ended were staying
current with their payments. Looking ahead, bankers
were optimistic that conditions will improve as the likelihood of an effective COVID-19 vaccine increases.
Professional and Business Services
Manufacturing
Demand for professional and business services strengthened further from its previous high level. IT firms, in
particular, experienced robust demand for digitization
projects and support for online retailing operations. One
marketing firm noted an uptick in advertising activities.
Contacts expressed optimism for the coming months and
expected demand to remain strong.
Manufacturing orders increased modestly, although at a
slower rate than in the previous period. Firms also reported slightly better capacity utilization, and plans for
capital investment were stable. By end-market, the wide
variation in activity that was seen in recent periods persisted. Firms that make consumer durables (such as
autos) and goods related to homebuilding continue to
experience strong demand. Also, the growth of online
retailing boosted orders for producers of packaging and
logistics equipment. Conversely, aerospace demand
remained flat at low levels because of depressed air
travel. Similarly, orders for oil and gas equipment remained weak because of low levels of oil and gas drilling. Looking forward, contacts expected demand to
improve modestly.
Freight
Demand for freight services strongly increased, and
firms expect the momentum to continue into the next
several months. Logistics firms indicated that strong
online retail sales growth was keeping fulfillment centers
busy. Cargo volumes picked up as manufacturers and
retailers built up their inventories. Also, import volumes
were reported to have increased ahead of the holiday
shopping season. Many firms in the industry indicated
that high staff turnover and difficulty finding workers
made it difficult for them to keep up with demand. Ŷ
Real Estate and Construction
Demand for homes remained strong, and contacts attributed this primarily to low mortgage rates. Although a
seasonal slowdown is normally experienced around this
time of the year, homebuilders and real estate agents
noted that sales have yet to slow. Looking to the next
two months, contacts were concerned that demand may
soften as COVID-19 cases increase. One homebuilder
indicated that traffic on the firm’s website had declined,
suggesting that new home sales may soon begin to
For more information about District economic conditions visit:
www.clevelandfed.org/region
D-2
Federal Reserve Bank of
Richmond
The Beige Book ■ November 2020
Summary of Economic Activity
The Fifth District economy expanded at a moderate rate in recent weeks. Although some sectors reported strong
growth, most businesses reported demand or sales at levels below their pre-pandemic or year-ago levels. Manufacturers experienced robust growth in shipments and new orders, and in some cases, demand exceeded capacity as producers were constrained by labor and supply chain factors. Ports and trucking companies saw strong growth in volumes,
driven by high demand for furniture, consumer goods, and autos. Retailers reported little change in overall sales and low
customer foot traffic, however there was strong growth in certain categories. Travel and tourism declined modestly as
leisure travel softened. Restauranteurs voiced concerns about colder weather impacting outdoor dining in the coming
months. Residential home sales picked up markedly and prices rose for both new and existing homes. Commercial real
estate grew modestly. Office and retail vacancies remained elevated but rent payments held up. Despite moderate
growth in mortgage demand, total loan volumes declined slightly, according to Fifth District financial institutions. On
balance, the demand for nonfinancial services rose slightly in recent weeks. Employment continued to rise, but some
firms looked to invest in technology or automation rather than hiring more workers. Overall, price growth was little
changed as prices received by firms grew modestly.
purchases of personal protection equipment contributed
to the growth in input costs compared to last year.
Employment and Wages
Employment in the Fifth District rose moderately since
the previous report. Despite recent increases, the overall level of employment remained below the prepandemic level. Some professional and financial services firms reported a recent uptick in hiring, particularly
for accountants, lawyers, and IT professionals. An infrastructure design and consulting firm was hiring engineers due to strong demand for their services. Similarly,
an advanced manufacturing firm reported strong growth
in hiring for engineers, technicians, and administrative
staff. Several businesses, however, were hesitant to hire
and some looked to invest in technology or automation
rather than increasing employment. Other firms reported
difficulty finding workers to fill open positions. Wage
growth remained modest, overall.
Manufacturing
Manufacturers reported strong increases in shipments
and new orders since our last report. Producers of furniture, textiles, home goods, food, and shipping materials
reported robust demand, often exceeding capacity.
However, many manufacturers reported that production
was constrained by unavailability of labor and supply
chain disruptions resulting from tariffs, shutdowns, and
shortages. Some manufacturers expressed concerns
about recent increases in new COVID cases, leading to
uncertainty about the extent that they would be able to
operate in the near future.
Ports and Transportation
Fifth District ports saw robust growth in shipping volumes
in recent weeks. Contacts reported volumes were up
over the year and neared record levels. Import levels
continued to exceed export levels, but both registered
strong growth and high volumes. Furniture, consumer
goods, and auto imports were particularly strong, but
machinery and beverage imports were weak. On the
export side, machinery, meat, and grocery products were
strong. Lumber and grain exports improved slightly but
remained soft compared to year-ago levels.
Prices
Price growth was little changed, on balance, in recent
weeks. According to our most recent surveys, manufacturers and service sector firms reported modest growth
in prices received, averaging well below two percent.
Growth in prices paid for inputs remained moderate and
generally outpaced growth in prices received. Firms in
both goods producing and service providing sectors
continued to state that additional cleaning measures and
E-1
Federal Reserve Bank of Richmond
Trucking companies reported high volumes and strong
growth since our last report. High rates and fairly stable
costs led to strong profits. Volumes of home improvement goods and packaging materials were particularly
high. Demand often exceeded supply, leading some
companies to turn away business. Trucking companies
continued capital investments but faced capacity constraints from lack of available drivers. Contacts noted
that drivers from smaller companies that closed during
the pandemic often left the industry or did not qualify to
drive for larger companies with higher safety standards.
Commercial real estate leasing grew modestly in recent
weeks. Vacancy rates remained elevated for office and
retail, but rent payments generally have held up. Office
tenants asked for short-term renewals as they reevaluated space needs and increasingly looked to locate in
smaller buildings, often in the suburbs, instead of renting
space in urban high-rises. Some retail vacancies opened
up as tenants went out of business, but realtors reported
new interest in those spaces. Industrial space remained
in high demand, driven largely by ecommerce. Multifamily vacancy rates varied by location and were notably
high in the District of Columbia. Rents were soft in retail
and multifamily but high for industrial space. High construction costs encouraged repurposing of old buildings
by companies instead of building new sites.
Retail, Travel, and Tourism
Fifth District retailers reported little change in recent
weeks, and business remained below year-ago levels.
Home goods and food retailers continued to see strong
demand. Local retailers that also sell online reported
solid online sales while in-store shopper traffic remained
low. Auto sales were fairly stable, and dealers held out
for higher prices because of low supply. Retailers
worked to restock inventories to prepare for holiday
sales, but some contacts reported that delays and shortages were limiting their ability to do so.
Banking and Finance
Overall, respondents reported that loan activity declined
slightly for this period, despite moderate mortgage loan
growth. On balance, contacts indicated conventional
commercial lending remained unchanged with several
banks indicating tightening credit standards, especially
for hospitality, retail, and office loans. Deposit growth
was moderate even with interest rates paid on deposits
remaining low. Credit quality remained good, but a few
respondents said they were carefully watching how
some mid and lower tiered loans will perform in 2021. In
addition, there was some concern regarding increased
competition as banks search for loan volume to help
offset lower yields.
Travel and tourism in the Fifth District saw a modest
decline since our last report and was well below yearago and pre-pandemic levels. Hotel occupancy was low,
as leisure travel softened and business travel remained
very low. Restaurateurs expressed concerns about the
feasibility of outdoor dining heading into the colder
weather, as both restrictions and low demand limited
indoor dining. Attractions, museums, and performing
arts also saw weak demand. Many businesses felt that
demand would not return until a vaccine becomes widely available, and many businesses faced renewed constraints on activity with the recent surge in virus cases.
However, some mountain resorts reported solid to
strong demand.
Nonfinancial Services
On balance, demand for nonfinancial services picked up
slightly in recent weeks. Some firms reported moderate
growth, particularly those engaged in construction related services, information technology, legal, and financial
services. Several other firms, however, reported flat to
declining demand due to limited business-to-business
spending. A marketing company, for example, said that
businesses seemed to be conserving resources and
marketing budgets were one of the first places that companies look to cut. Health service providers continued to
report strong demand. ■
Real Estate and Construction
Home sales in the Fifth District continued to be strong
since our last report. Sales were robust across price
ranges and locations; demand for moderately priced
suburban homes was particularly strong. Prices were
strong and rising for both new and existing homes,
which contacts attributed to low inventories, high demand, and low mortgage rates. Average days on the
market decreased, as did the number of listings. Construction costs were high as lumber prices remained
significantly elevated. Realtors reported that buyers
were increasingly looking for houses with more land,
multiple home offices, pools, and personal gyms.
For more information about District economic conditions visit:
www.richmondfed.org/research/data_analysis
E-2
Federal Reserve Bank of
Atlanta
The Beige Book ■ November 2020
Summary of Economic Activity
On balance, economic activity in the Sixth District expanded modestly from October through mid-November. Labor
markets continued to recover as some firms added to headcounts where demand was strong. Some contacts noted
rising nonlabor costs, especially related to construction and shipping. Retailers reported mixed activity. Auto dealers
reported solid retail vehicle sales, offset by softness in fleet sales. Tourism and hospitality noted slow improvements in
activity. Residential real estate remained strong, but challenges in commercial real estate markets continued. Manufacturing activity accelerated as new orders and production levels rose. Banking conditions stabilized, but net interest
margins remained compressed.
minum. Shipping costs rose as solid demand put increased pressure on capacity; however, fuel costs remained low. Firms continued to report little to no pricing
power, but some anticipate having the ability to pass
through increased costs in 2021. The Atlanta Fed’s
Business Inflation Expectations survey showed yearover-year unit costs decreased significantly to 1.3 percent in November, down from 1.6 percent in October.
Year-ahead expectations increased to 1.9 percent from
1.6 percent since the last reporting period.
Employment and Wages
On balance, contacts continued to report modest improvements in labor market conditions. Increases in
headcounts were strongly tied to improvements in demand. Some firms noted the ability to maintain or increase productivity levels with fewer employees, while
others reported onboarding new employees to provide
relief to overworked staff. Seasonal hiring was notable
among retailers, distributors, and delivery firms. Driver
shortages intensified as capacity constraints due to
social distancing measures at driver training locations
slowed the number of new certified drivers. Business
contacts indicated that companies in higher cost-of-living
geographies were recruiting accounting, IT, and other
professional staff to work remotely full-time, and are able
to pay salaries that were higher than local market rates,
but often lower than the salary paid in their geography.
Those hiring for higher skilled positions noted an ability
to find quality applicants. Overall, the supply of available
lower-skilled workers remained limited. Childcare challenges continued to be noted and there were some
reports of accelerations in retirements.
Consumer Spending and Tourism
Retailers reported mixed activity over the reporting period, though demand generally outperformed forecasts.
Some retailers noted cutting store hours and reducing
costs to preserve margins. The outlook for the holiday
season remained uncertain. Although overall District
auto sales declined from September to October, retail
auto sales remained solid while fleet sales fell significantly as compared with year-earlier levels.
Travel and tourism contacts reported that the industry
was slowly recapturing demand, as some contacts reported a pickup in leisure travel. Business travel continued to struggle. Based on the current trajectory, a full
recovery is not expected until 2023.
There were fewer reports of wage and salary reductions
since the previous report, and some firms began to
restore pay cuts or plan to do so in 2021. Increases in
wages were largely targeted to specific occupations and
lower-skilled positions.
Construction and Real Estate
Although they moderated slightly from peak levels experienced over the summer, District home sales remained
strong, with low interest rates continuing to be the primary driver of demand. Existing home inventory remained
Prices
Over the reporting period, contacts continued to note
some rising input costs, particularly for lumber and alu-
F-1
Federal Reserve Bank of Atlanta
tight and new home construction continued to lag demand. Construction costs, especially lumber and labor,
remained elevated. Consequently, home prices continued to rise, putting pressure on affordability. Rural areas
in Alabama, Mississippi, and Louisiana, urban markets in
south and central Florida, and the southern portion of the
Atlanta metro area were geographies that stood out in
terms of the share of mortgages that remained in some
stage of delinquency.
elevated. Outside of residential real estate and commercial loans, loan balances across multiple portfolios were
stagnant or edged downward. Instead of increasing
loans, banks held higher balances in cash accounts or
securities portfolios.
Energy
Hurricane Zeta made landfall within the District during
the reporting period, causing temporary disruptions to oil
and gas production in the Gulf of Mexico. Amid continued soft demand for crude oil, industry contacts reported
consolidation among refiners and expect more in the
coming months. Petrochemical manufacturers noted that
reduction in crude oil refining has lowered the availability
of residual products used for fuel, which ultimately has
affected production supply chains, capabilities, and
costs. While some energy contacts noted that petrochemical and chemical processing expansion projects
were gradually restarting, others reported that many
projects that were delayed will be on hold into 2021.
Within the utilities sector, residential power demand was
up compared with this time last year; however, commercial and industrial segments, although recovering, were
down overall. Contacts described that recovery of commercial energy usage slowed in recent weeks since
demand is sensitive to COVID-19 movements. Still,
capital investment within the utilities sector remains
solid, including increasing investment in renewable energy sources in the industry’s ongoing pursuit of increased
decarbonization.
Business contacts reported that the commercial real
estate sector continued to encounter bifurcated conditions associated with the effects of the pandemic. Hospitality, which was especially hard hit earlier this year, saw
modestly improving conditions come to an end, as occupancies declined from the prior reporting period. Retail
remained challenged; however, contacts reported limited
improvement in rent collections. Low levels of tourism
and travel have had a notable impact on activity across
the hospitality and retail sectors. Recent asset valuations
in public markets confirmed that values are deteriorating,
which, along with tighter underwriting standards, may
create impediments to new lending.
Manufacturing
Most manufacturing firms reported an increase in overall
activity over the reporting period as new orders and
production levels continued to climb. Production managers indicated that supplier delivery times were getting
longer, and finished inventory levels remained slightly
elevated. Expectations for future production levels declined, with over one-third of contacts expecting higher
levels of production over the next six months compared
to one-half during the previous reporting period.
Agriculture
Agricultural conditions were mixed. While drought-free
conditions prevailed in most of the District, some producers reported crop damage caused by recent hurricanes.
Contacts noted increases in some agriculture commodity
prices attributed to changes in supply and demand, the
USDA Food Box program, and improved trade with
China. Some contacts also noted that increased federal
assistance helped improve balance sheets. Cotton harvesting progressed, though below the five-year average
pace, while soybean and peanut harvesting were near
their five-year averages. The USDA reported year-overyear prices paid to farmers in September were up for
rice, soybeans, cattle, and eggs, but down for corn,
cotton, broilers, and milk. On a month-over-month basis,
prices increased for corn, cotton, soybeans, cattle, and
eggs, but decreased for rice, broilers and milk. ■
Transportation
District transportation contacts indicated that demand
was largely consistent with the previous report. Total
year-over-year rail traffic rose as robust intermodal
freight volumes offset declines in agriculture products,
petroleum and petroleum products, and aggregates and
coal. Trucking companies noted solid demand; however,
driver shortages continued to constrain capacity for
some. At District ports, container traffic increased, while
roll-on, roll-off cargo, breakbulk and bulk freight volumes
remained below year-earlier levels. Several contacts
reported strong warehouse expansion activity across the
region.
Banking and Finance
Banking conditions stabilized, taking pressure off of
earnings. Net interest margin compression continued but
significant additions to provisions for loan losses were
not required. Banks appeared to struggle to find suitable
lending opportunities while deposit levels remained
For more information about District economic conditions visit:
www.frbatlanta.org/economy-matters/regional-economics
F-2
Federal Reserve Bank of
Chicago
The Beige Book ■ November 2020
Summary of Economic Activity
Economic activity in the Seventh District increased moderately in October and early November, though activity remained
below its pre-pandemic level. Contacts expected further growth in the coming months, but nearly all expected full recovery would not occur until at least the second half of 2021. Employment, consumer spending, and manufacturing increased moderately; business spending increased modestly; and construction and real estate was flat. Wages rose
slightly, as did prices. Financial conditions improved modestly. Strong harvests, government support, and higher prices
boosted expectations for farm income.
Employment and Wages
Consumer Spending
Employment increased moderately overall during the
reporting period. Several contacts made little or no
change to their staffing levels and there were some
reports of increased headcounts in response to sales
growth. Numerous contacts reported increased absenteeism because of Covid-19 cases or exposures among
their workers, but these firms were generally able to
maintain their output levels. Many contacts noted difficulty in finding workers, especially at the entry level. Several contacts reported using overtime to make up for elevated absenteeism and unfilled positions. Wages across
skill levels and benefits costs moved up slightly.
Consumer spending grew moderately over the reporting
period. Nonauto retail sales increased modestly. Demand remained robust in the appliance, electronics,
home accessories, home improvement, power sports,
and recreational goods categories. Apparel rebounded
somewhat, and sales at party supply stores were strong.
Growth in e-commerce eased but continued to register
sharp gains from a year earlier. Contacts expected holiday-related spending to increase slightly compared with
last year. Light vehicle sales decreased modestly. Auto
service department activity slowed, and contacts attributed the pullback to fewer people traveling to school and
work. Leisure and hospitality spending increased but
remained weak, as new and existing restrictions on
business travel and conventions held back gains. Contacts said that spending for elective health care procedures fell. Social service organizations reported strong
demand for mental health services and financial assistance.
Prices
Prices increased slightly in October and early November,
and contacts expected a moderate increase in prices
over the next 12 months. Consumer prices ticked up, led
by higher food and vehicle prices. Producer prices increased slightly. Input costs were up modestly, driven by
rising raw materials and shipping prices. Several contacts said that a shift forward in holiday season deliveries
had pushed up shipping rates. Energy prices moved
down further, as oil and gas inventories remained elevated and demand was slow.
Business Spending
Business spending increased modestly in October and
early November. Retail inventories were generally comfortable, though stocks of certain vehicle models remained well below normal levels. Most manufacturers
also reported comfortable inventory levels, but a number
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Federal Reserve Bank of Chicago
continued to experience minor supply chain problems,
especially related to raw materials. Capital expenditures
were little changed overall, though a number of contacts
said they had resumed making investments after pausing since the start of the pandemic. Several firms cited
increased efficiencies as their justification for current
expenditures. Contacts expected a moderate increase in
capital spending over the next twelve months. Freight
and shipping demand increased moderately, and contacts noted that capacity constraints had led to sizeable
price increases. Commercial and industrial energy consumption increased slightly.
standards tightened modestly. In consumer markets,
loan demand increased somewhat, led by growth in
residential mortgages. Contacts reported that delinquencies had slightly increased as accounts exited deferral
programs but remained at low levels. Loan quality decreased slightly, while loan standards tightened modestly. Contacts continued to report high levels of deposits
for both businesses and households.
Agriculture
Farm income beat expectations for the growing season,
as prices for key agricultural commodities moved higher
and government support continued. Corn, soybean, and
wheat prices were up again, reflecting tighter stocks and
increased exports. With the harvest nearly over, most of
the District saw above-trend corn and soybean yields.
Most specialty crops had solid yields as well. Favorable
weather conditions allowed farmers to complete field
work that had been skipped in prior years because of
poor weather. Dairy prices were mixed, but up on net.
Hog and cattle producers also benefited from higher
overall prices, but expressed concern about rising feed
costs. ■
Construction and Real Estate
Construction and real estate activity was unchanged on
balance over the reporting period. Residential construction increased moderately. Contacts noted that a lack of
available lots and high materials costs continued to
restrain growth. Residential real estate activity remained
vibrant, particularly in the single-family market. Home
prices rose slightly, while rents rose marginally. Nonresidential construction decreased some. Commercial real
estate activity fell modestly, as did prices and rents.
Contacts reported an increase in requests for shorter
leases. Sublease space increased modestly as some
tenants, particularly in the office sector, reduced their
footprint in response to increased teleworking.
Manufacturing
Manufacturing production increased moderately in October and early November but remained below where it
was before the pandemic began. Auto output continued
to rebound and was near its pre-pandemic level. Steel
production increased moderately, with reports of greater
demand from the construction, auto, and appliance
industries. Sales of specialty metals were mixed. Demand for heavy machinery rose slightly, driven by the
automotive and construction sectors. Demand for heavy
trucks increased strongly, helped by higher carrier profits. Manufacturers of building materials reported a small
increase in shipments, supported by growth in residential
construction.
Banking and Finance
Financial conditions improved modestly over the reporting period. Participants in the equity and bond markets
reported a small improvement in conditions, though
volatility remained elevated in light of the pandemic and
election. Business loan demand increased modestly,
with contacts highlighting increases in small business
banking. Contacts also reported an increase in requests
for equipment financing. Business loan quality deteriorated slightly, with declines concentrated in the hospitality,
retail, and commercial real estate sectors. Business loan
For more information about District economic conditions visit:
chicagofed.org/cfsbc
G-2
Federal Reserve Bank of
St. Louis
The Beige Book ■ November 2020
Summary of Economic Activity
Reports from District contacts suggest economic activity has continued to increase slightly since the previous report;
however, conditions deteriorated toward the end of the reporting period. The pace of activity continues to remain highly
variable across sectors. Employment has increased slightly, while wages have increased modestly. Consumer prices
increased slightly; however, nonlabor input costs have experienced stronger increases. The overall outlook for business
conditions over the next 12 months has improved but remains slightly pessimistic.
cost is being passed on to consumers. Raw materials
prices have increased moderately overall; agriculture
contacts noted that prices are at a yearly high, which
contacts attributed to low yields nationally paired with
healthy demand for staple crops such as corn and wheat
both domestically and from China. Coal and lumber
prices have declined since the previous report. A lumber
yard contact noted that with inventories back to normal
levels, lumber prices have declined 40% after spiking in
recent months, putting them back at average levels
compared with prices in previous years. A real estate
contact noted that the price of plumbing materials has
increased. Another contact noted increases in containerboard prices due to higher demand from online shopping
coupled with lower supply from COVID-19 and naturaldisaster-related production delays.
Employment and Wages
Employment has increased slightly since the previous
report. The strongest growth was reported in manufacturing, transportation, and healthcare. Expanding firms
continued to note labor supply shortfalls, ascribing it to
workers' childcare and health concerns. One firm sought
new employees in neighborhoods without adequate
transportation by expanding a bus system to and from its
warehouses. However, half of contacts reported remaining below pre-pandemic employment levels. Staffing
contacts noted that many firms remained hesitant to hire
or re-hire workers in the face of policy uncertainty and
COVID-19 resurgences. Some firms—particularly small
firms and those in the leisure and hospitality industry—
exhibited more mixed employment trends.
Wages have grown modestly. Two-thirds of contacts
reported raising wages for new and existing employees
due to labor shortages, especially for low-wage and high
-contact positions; one staffing firm instituted a minimum
wage at which it would hire industrial workers for clients,
believing it impossible to fill vacancies otherwise. Smallfirm wage growth remained more mixed, with many
reportedly unable to compete with larger firms’ raises.
Consumer Spending
Reports from general retailers, auto dealers, and hospitality contacts indicated that consumer spending activity
has been mixed since our previous report. Over the
course of October, seasonally adjusted credit and debit
card spending generally declined across the District. As
of early November, general retailers and restaurants
reported mixed business activity. Auto dealers reported
that current-quarter sales have met or exceeded expectations. Dealers cited low interest rates and gas prices
helping to bolster sales. Tourism and hospitality contacts
Prices
Input prices have increased strongly. However, contacts
reported only a slight growth in prices charged to consumers, indicating that very little of the increased input
H-1
Federal Reserve Bank of St. Louis
reported that current-quarter sales fell short of expectations and continued to be much lower than they were
during the same period last year. Hospitality contacts
expect business activity to decline in the coming months.
Commercial real estate activity has been mixed since
our previous report. Demand is down for both retail and
office space, with contacts reporting a loss of retail tenants. Contacts in Memphis expect a loss of tenants as
leases come to an end. However, demand for industrial
space remains high, particularly for warehouse and
manufacturing space, with demand expected to remain
high or increase in the next quarter.
Manufacturing
Manufacturing activity has strongly increased since our
previous report. Survey-based indices suggest that
manufacturing activity moderately increased in Arkansas
and strongly increased in Missouri. In both states, firms
reported a strong uptick in new orders and production.
Auto manufacturers in south central Kentucky and southern Indiana reported high levels of production. Firms
reported that supply chain issues that were previously
constricting production have mostly been resolved. One
contact noted that containerboard paper manufacturers
are seeing increased demand, but some mills are experiencing slowed back production due to minimal crew
schedules in response to COVID-19 precautions.
Commercial construction activity has been mixed. Contacts observed that most speculative activity in the office
and retail space has ceased. However, construction for
industrial space remained strong due to high market
demand, with multiple active projects across the region.
Contacts reported that large distribution companies are
buying up new speculative inventory in order to quickly
expand capacity.
Banking and Finance
Banking conditions in the District have experienced little
change since the previous report. Overall loan demand
remained low due to the pause in business activity following the recent surge in COVID-19 cases in the District. Residential real estate loans increased slightly, led
by elevated refinancing activity to lock-in favorable rates.
Banking contacts continued to report high levels of deposits despite lower rates paid on interest-bearing accounts. Delinquency rates remained generally low; however, some contacts observed a slight uptick in deferred
payments among hospitality and commercial real estate
clients. Competition for new loans and lower interest
rates continued to narrow net interest margins.
Nonfinancial Services
Activity in the nonfinancial services sector has been
mixed since our previous report. Airport passenger traffic
appears to be declining further relative to last year as
business travel remains minimal and rising numbers of
COVID cases lead to holiday travel cancellations. A
parcel services contact indicated that business has
improved, and the firm is already experiencing holidaylevel activity. Several trucking contacts were optimistic
about the industry going into 2021, as fewer competitors
remain in business. Feedback from other logistics contacts was mixed regarding both sales in the previous
quarter and the outlook for the next quarter, with one
citing a lack of demand. A healthcare contact reported
lower-than-expected sales last quarter, given increased
apprehension about seeking health services.
Agriculture and Natural Resources
District agriculture conditions have remained unchanged
since our previous reporting period. Production forecasts
for corn, cotton, and soybeans have decreased, while
cotton production forecasts have increased. Production
levels for corn, rice, and soybeans are expected to be
significantly higher than in 2019, while cotton production
is expected to see a moderate decline. District contacts
expressed optimism, citing higher-than-expected yields
due to excellent weather conditions and a strong rebound in prices.
Real Estate and Construction
Residential real estate activity has increased modestly
since our previous report. Home sales remain robust for
this time of the year and inventory levels remain low. A
St. Louis-based contact noted that lower interest rates
are a major factor in the increased demand for homes
and thus why selling prices are rising.
Natural resource extraction conditions declined modestly
from September to October, with seasonally adjusted
coal production declining around 3%. Production is still
struggling overall, declining 24% from a year ago. Contacts reported reducing employee hours and offering
early retirement options as a result of the industry struggles. ■
Residential construction activity has remained unchanged since the previous report. Contacts noted that
high demand for residential real estate is driving new
residential construction, as there continues to be low
residential inventory. Contacts also noted that construction is limited by lack of building materials, and a contact
in St. Louis reported that the spike in COVID-19 cases is
forcing them to regularly quarantine workers due to
outside exposure.
H-2
Federal Reserve Bank of
Minneapolis
The Beige Book ■ November 2020
Summary of Economic Activity
The Ninth District economy grew modestly overall since the last report, but some signs of softening appeared recently
as COVID-19 infections surged. Employment rose modestly since the last report, but conditions were volatile. Wage
pressures were moderate and appeared to be increasing for some, while price pressures were modest. Consumer
spending, manufacturing, energy, and residential construction and real estate grew since the previous report. Commercial construction and real estate activity fell. Agricultural conditions improved slightly.
Employment and Wages
in sectors, such as health care, experiencing worker
shortages due to COVID-19-related quarantines. Firms
also reported difficulty filling open positions, frequently
citing enhanced unemployment benefits as a work
disincentive. However, workforce contacts noted that the
expiration of more generous benefits has not led to a big
increase in job seekers. Other obstacles—child care
availability, virtual school for households with children,
and virus fears—also impacted labor participation,
particularly among women. A Minnesota contact noted
that workforce systems were “failing to reach” those
most negatively affected, particularly African American
and noncollege-educated workers.
Employment rose modestly since the last report, but
conditions were volatile and likely to remain so in the
face of rising COVID-19 infections. A survey of District
construction firms in late October found that firms were
hiring overall, particularly in skilled trades. However,
hiring sentiment for the coming months was somewhat
softer. A handful of ad hoc surveys of Minnesota firms in
November showed similar findings. Job postings have
seen modest-but-steady growth through mid-November
across most District states. A western South Dakota
contact said many firms were “desperate for help,” a
situation worsened by visa programs that were no longer
a reliable labor source. However, there was widespread
concern over new, pandemic-related restrictions on
business activity and employment. Some indicators also
showed small business employment falling steadily in
October through mid-November. Initial unemployment
insurance claims increased in the last half of October,
due in part to normal seasonality, but were nonetheless
several times their level last year. The number of
workers receiving unemployment benefits steadily
declined through October, but remained high overall,
especially among minority workers. Though
unemployment has been dropping steadily, state
government contacts noted that falling labor force
participation was responsible for much of the recent
drop.
Wage pressures were moderate and appeared to be
increasing for some. More District businesses reported
raising average wages than cutting them. Certain sectors
like construction were seeing greater wage pressures,
and sources also noted bonuses and temporary wage
hikes for frontline retail workers, higher entry-level
wages, and reinstatement of pre-pandemic wage levels
that had been cut. Pressures were not uniform, however.
A large Minnesota nonprofit said that frontline staff
received wage increases related to virus exposure, while
other staff have been laid off or had wages frozen.
Prices
Price pressures since the previous report were modest
overall. A majority of firms responding to recent
Minneapolis Fed surveys reported little or no change to
Labor constraints became more pronounced, particularly
I-1
Federal Reserve Bank of Minneapolis
nonlabor input costs and final prices compared with prepandemic levels. By contrast, more than half of
respondents from the construction industry reported
input price increases of greater than 5 percent.
Respondents also expected a similar rate of price
increases over the coming year, consistent with rapid
growth in construction materials prices. Home heating
costs were expected to rise more in District states than
nationwide this winter, largely due to regional differences
in the prices of natural gas and greater demand due to
work from home. Retail fuel prices in District states as of
mid-November fell slightly from the previous reporting
period. Prices received by farmers in September
increased from a year earlier for soybeans, wheat, dry
beans, cattle, hogs, eggs, and turkeys, while prices for
corn, hay, potatoes, chickens, and milk decreased.
construction continued to outperform other industry
segments, in both recent project activity and planned
future work, according to the recent survey. Most of the
District’s metros saw growth in single-family permitted
units in October compared with a year earlier.
Commercial real estate fell modestly since the last
report. Vacancy rates have risen across most categories,
particularly in retail and office space. Industrial vacancy
rose slightly in Minneapolis-St. Paul but was still
considered healthy. While federal and state eviction
moratoriums were keeping people housed, rent
collections at lower-priced units in Minnesota were
reportedly falling faster than at higher-priced units.
Rising nonpayments were also squeezing smaller
landlords, who have fewer options for mortgage
forbearance than larger landlords. Residential real estate
saw robust growth, with closed home sales in October
seeing double-digit growth across the District. A
Minneapolis-St. Paul contact said demand was
“relentless.” Low inventories of homes have also resulted
in strong increases in median sale prices.
Consumer Spending
Consumer spending grew slightly overall. Car and truck
sales rose modestly in October compared with a year
earlier, and contacts noted strong demand for
recreational and powersport vehicles. However,
spending was checked by softening demand at retail,
restaurant, accommodation, and other firms more
directly affected by rising COVID-19 infections.
Numerous ad hoc polls showed that (self-reported)
consumer spending remained below pre-pandemic
levels, and future spending would be influenced by
infection trends. Strong outdoor activity has lingered;
visits to most of the District’s major national parks rose in
October compared with last year, and Mackinac Bridge
traffic to Michigan’s Upper Peninsula also rose over the
same period. However, leisure travel through District
airports as of mid-November had leveled off after
modest-but-steady growth through September.
Manufacturing
District manufacturing activity increased briskly since the
previous report. A regional manufacturing index
indicated strong growth in October in Minnesota and
South Dakota compared with a month earlier, with
positive but more moderate growth in North Dakota. A
producer of cleaning equipment was expanding
operations as it sought to in-source more if its supply
chain. A manufacturer of home furnishings reported
difficulty keeping up with strong demand due to
pandemic-related safety measures.
Agriculture, Energy, and Natural Resources
Agricultural conditions improved slightly due to solid
harvests, recent increases in prices for some
commodities, and federal relief aid. Respondents to the
Minneapolis Fed’s third-quarter (October) survey of
agricultural credit conditions mostly reported unchanged
farm income compared with a year earlier, while the
outlook for the fourth quarter was for increasing farm
incomes. District oil and gas activity increased slightly
from low levels; the number of active drilling rigs was
little changed since the last report, while oil production
increased from its lows earlier in the year but remained
below pre-pandemic output. District iron ore mines were
operating at normal levels except for one idled facility
that was scheduled to reopen in December. Contacts in
nonferrous mining described activity as steady. ■
Construction and Real Estate
Commercial construction fell moderately since the last
report. Industry data showed a slowing of new and active
projects in the District. A survey of construction firms in
late October found that 40 percent saw revenues decline
compared with earlier in the pandemic, and a slightly
smaller share saw revenues increase. Firms were also
more pessimistic about revenues in the coming months
due to a shrinking pipeline of new projects. A minorityowned contractor in the western part of the District said
the company had a fraction of its typical workload due to
COVID-19-related cutbacks in spending on government
projects. “There is very little work out there … and prices
are being driven down drastically as contractors are all
bidding for the same projects.” However, prospects in
Minnesota improved with the state’s recent passage of a
record-high $1.8 billion bonding bill. Residential
I-2
Federal Reserve Bank of
Kansas City
The Beige Book ■ November 2020
Summary of Economic Activity
The Tenth District economy continued to expand slightly in October and November, although activity remained below prepandemic levels in several sectors. After rising in October, consumer spending fell slightly in November due to a pullback
in retail, restaurant, auto and tourism sales. However, contacts expected sales in all consumer segments to rebound in
the months ahead. Manufacturing production and new orders expanded modestly, and capital expenditures were expected to rise at both non-durable and durable goods plants. Transportation and wholesale trade sales picked up moderately, and sales rose modestly in the professional and high-tech sector. Home sales and prices increased and were well
above year-ago levels even as inventories fell further. Commercial real estate conditions worsened modestly, and additional declines were expected in the months ahead. Energy activity held steady, and the farm economy improved moderately as agricultural commodity prices increased. Employment rose slightly, but remained modestly below year-ago levels.
Wages continued to rise, and modest gains were anticipated in the next few months. Input prices rose at a faster pace
than selling prices, and most industries expected additional price gains moving forward.
Employment and Wages
sectors. Contacts in the retail and restaurant sectors
indicated that growth in selling prices was expected to
accelerate in the coming months. Prices for raw materials and finished products in the manufacturing sector
followed a similar pattern, but although selling prices
were expected to grow more quickly moving forward, raw
materials prices were still expected to rise at a faster
pace. Transportation input prices rose moderately in
October but edged down in November, while selling
prices rose modestly. Transportation contacts expected
moderate gains in the coming months. Construction
supply contacts indicated that selling prices grew moderately, but expected them to fall in the winter months.
District employment increased slightly during the survey
period, but remained modestly below year-ago levels.
Growth was driven by increases in health services and
retail employment, but was held back by moderate declines in the restaurant and tourism sectors. Manufacturing contacts noted a slight increase in employment, and
contacts expected additional gains in the coming
months. Employment expectations within the services
sector were mixed, with the biggest gains expected in
retail and wholesale trade and the biggest losses expected in auto and professional and high-tech services.
A majority of contacts in the services sector reported
labor shortages, indicating a need for truck drivers and
retail, restaurant, and technology staff. Wages rose
modestly in October, followed by smaller gains in November, leaving wages modestly above year-ago levels.
Modest wage increases were expected moving forward.
Over the next year, most firms expected employment to
increase or remain unchanged, although a lesser number still expected declines. Contacts cited expected
sales growth and the need to expand the current skillset
of employees as the primary reasons for hiring.
Consumer Spending
Consumer spending increased slightly in October, but
decreased slightly in November. Moderate gains in retail
and health services drove the rise in October. However,
a slight decline in retail sales combined with modest
decreases in restaurant and auto sales and moderate
declines in tourism led to an overall decline in November
sales activity, despite an increased pace of sales in
health services. Despite the drop in retail sales in November, activity remained moderately above year-ago
levels. However, tourism and restaurant sales remained
well below year-ago levels. In November, respondents
from all sectors expected positive growth in the months
ahead, with tourism and restaurant sectors expecting
Prices
Input prices rose moderately, outpacing modest gains in
selling prices in both the services and manufacturing
J-1
Federal Reserve Bank of Kansas City
modest gains for the first time since spring. The majority
of firms indicated that developments related to COVID
have pushed their firm to either expand, implement for
the first time, or create a plan to implement an online
business segment.
increases in residential real estate loan demand and
slight increases in commercial real estate loan demand.
Consumer installment loan demand held steady, agricultural loan demand decreased slightly, and commercial
and industrial loan demand fell modestly. Credit standards tightened slightly for residential real estate, commercial real estate, and commercial and industrial loans.
Loan portfolio quality decreased slightly in comparison to
a year ago, but bankers expected significant decreases
in loan quality over the next six months. Despite this,
deposit levels remained strong. Overall, bankers were
somewhat concerned with the continued stress on the
economy due to the pandemic, although specific sectors,
including residential real estate, remained strong.
Manufacturing and Other Business Activity
Manufacturing activity expanded modestly since the
previous survey, but still remained modestly below yearago levels. Production and new orders increased modestly for both durable and non-durable goods, but durable goods activity remained moderately below year-ago
levels. By contrast, nondurables contacts indicated that
production was slightly above year-ago levels for the first
time since February. Expectations were positive as
contacts in the durables and non-durables sectors expected modest and moderate gains, respectively. Capital
expenditures were expected to increase modestly in both
sectors. Many contacts indicated that the uncertainty
surrounding the pandemic and related business restrictions/ policies was restraining hiring plans.
Energy
District energy activity was relatively unchanged from the
previous survey period, with revenues and drilling activity
mixed across individual firms. Debt increases and bankruptcies continued for several regional firms, while other
contacts reported positive net income and capital expenditure plans. Firms expected additional mergers and
acquisitions moving forward. Many contacts reported
additional efficiency gains and continued investment in
innovations to lower operating costs. The number of
active oil and gas rigs in the District increased slightly in
October and November, due to gains in New Mexico and
Oklahoma. However, the number of active rigs remained
below year-ago levels. Oil prices held relatively steady,
and natural gas prices rose. However, prices for oil and
gas remained below the average price District firms
reported needing for drilling to be profitable.
Outside of manufacturing, sales in transportation and
wholesale trade increased moderately, and sales and
capital expenditures in professional and high-tech services rose modestly. For the latter, this marked an improvement from declines in late summer. Contacts in
transportation and wholesale trade expected moderate
gains, while those in professional and high-tech services
anticipated modest declines.
Real Estate and Construction
Residential real estate activity increased moderately,
while commercial real estate conditions continued to
worsen at a modest pace. Despite additional declines in
home inventories, sales increased modestly, leading to
moderate gains in home prices. Home sales and prices
were strongly above year-ago levels, and this trend was
expected to continue in the coming months. Construction
supply sales continued to rise modestly, but were expected to decline heading into the winter months. Commercial real estate conditions worsened, as vacancy
rates rose, developers had difficulty accessing credit,
and there were slight decreases in absorption rates,
sales, prices, and construction. Commercial rents edged
down in October but were unchanged in November, the
first month without a decline since February. Contacts
indicated that rents were expected to hold steady moving
forward, although overall commercial real estate conditions were expected to worsen modestly.
Agriculture
The Tenth District farm economy improved moderately
since the previous period alongside additional increases
in agricultural commodity prices. Since early October,
strengthening demand and downward revisions to production estimates led to sharp increases in corn and
soybean prices and moderate increases in most other
agricultural prices. Stronger profit opportunities than
earlier in the year, in addition to substantial government
payments to producers, supported farm sector finances.
Although farm income generally remained low in aggregate, contacts reported lower rates of problem loans
compared to a year ago. District contacts continued to
express concerns, however, about the potential for renewed pressure in the months ahead, depending on the
path of agricultural commodity prices, government support programs, and drought in some parts of the region.
■
Banking
In recent weeks, bankers reported a slight increase in
overall loan demand. Gains were driven by moderate
For more information about District economic conditions visit:
www.KansasCityFed.org/Research/RegionalEconomy
J-2
Federal Reserve Bank of
Dallas
The Beige Book Ŷ November 2020
Summary of Economic Activity
The Eleventh District economy expanded at a modest pace, but activity in most industries remained below normal levels. Recovery in the manufacturing, retail, and services sectors slowed. The housing market continued to outperform
expectations, but office leasing remained weak. Overall loan volume fell, though residential real estate lending continued to be robust. Energy activity remained depressed but showed some signs of improvement. Employment rose modestly, and several firms said weak demand and uncertainty about the course of the pandemic and/or related regulations
were a drag on hiring. Input costs rose moderately, while selling prices were flat to up slightly. Outlooks were generally
positive but uncertain, with political uncertainty and the trajectory of the pandemic weighing heavily on growth expectations for 2021.
Employment and Wages
Prices
Employment rose modestly, with continued reports of
hiring in certain sectors such as single-family home
construction and manufacturing. Most firms looking to
hire said they’ve been able to do so without difficulty,
though some staffing firms cited challenges due to unemployment insurance benefits. Voluntary separations
and/or job losses continued in the air transportation and
energy sectors. Several firms said continued weak demand and uncertainty about the course of the coronavirus pandemic as well as related regulations and government policies were a drag on hiring, with a few noting
it would take more than two years to reach their prepandemic employment level.
Input costs continued to increase at a moderate pace, in
part due to supply-chain issues. The exception was in
oilfield services where costs declined due to weak demand. Selling prices were flat to up slightly, with more
marked increases reported in the construction and retail
sectors. Contacts noted that pass-through of costs onto
customers remained limited.
Manufacturing
Manufacturing activity continued to recover, though at a
slower pace than in the previous reporting period. Output
rose with growth led by primary metals, fabricated metals, construction-related, and food product manufacturing. Several manufacturers, particularly those tied to the
energy and the leisure and hospitality sectors, said demand remained below normal. Petroleum refiners noted
a slight increase in utilization rates, and chemical production rose, but margins remained depressed due to
weak demand and high inventories. Overall, outlooks
among manufacturers remained positive, though uncertainty persists.
Wage growth remained subdued, with most firms noting
that they were not raising salaries or wages to attract
new hires or retain existing employees. Some contacts
cited cutting pay in order to be able to keep employees
on payrolls or recall furloughed workers. A few energy
sector companies said they weren’t cutting compensation but encouraging retirement among older, more
costly workers. An airline reported plans to cut noncontract employees’ salaries in absence of additional
government support.
K-1
Federal Reserve Bank of Dallas
Retail Sales
to work from home. Retail market conditions stayed
fragile, while industrial demand remained strong driven
by third party logistics and e-commerce activity. Investment sales have picked up for multifamily and industrial
properties.
Growth in retail sales slowed during the reporting period.
Some firms experiencing continued sluggish demand
attributed it to weakness in the oil and gas sector and in
tourist activity. Auto sales remained weak partly due to
low inventories. Hardware store sales have been boosted by rising home renovation activity. Wholesalers of
nondurable goods noted solid demand. Outlooks were
somewhat optimistic, although political uncertainty arising from the election and increasing COVID-19 cases
remain sources of concern.
Financial Services
Overall loan volume dipped during the reporting period,
with solid gains in residential real estate lending offset by
declines in consumer and in commercial and industrial
(C&I) loans. Loan pricing was competitive, and a few
contacts voiced concerns about margin compression.
Credit standards tightened, particularly for C&I and commercial real estate loans. Nonperforming loans rose over
the past six weeks, and over half of the respondents
expect an increase in delinquencies six months from
now. Perceptions of general business activity and outlooks for loan demand stayed positive, though there
were lingering concerns about political uncertainty, low
net interest margins, and deteriorating asset quality.
Nonfinancial Services
Recovery in the nonfinancial services sector slowed
following a surge in activity during the previous reporting
period. However, activity in the information and professional and business services industries saw continued
solid growth. Staffing firms noted a pickup in demand,
particularly for healthcare, IT, online retail, and call center services; however, activity remained below year-ago
levels. Air cargo volumes rose. Airlines saw modest
growth in bookings. Leisure travel to outdoor vacation
destinations continued to dominate bookings, while
corporate travel remained nearly nonexistent. Outlooks
among airline contacts remained weak and further reduction in capacity was expected. Activity in the leisure
and hospitality sector remained sluggish, and a contact
noted that a sizable share of hotel owners in Corpus
Christi would only be able to survive another six months
without government assistance. Nonprofit organizations
continued to face challenges due to lack of funding.
Energy
The Eleventh District rig count rose over the reporting
period. Well completions rose sharply as firms moved
forward with bringing uncompleted wells into production.
However, most contacts expect drilling and completion
activity to level off soon and hold nearly flat through mid2021. Contacts said that the recovery of oil consumption
remained their primary near-term concern, although
political uncertainty surrounding potential changes in the
regulatory environment was particularly worrisome for
smaller exploration and production and fracking-services
firms.
In general, outlooks were marginally positive, with the
resurgence of COVID-19 cases and political uncertainty
continuing to weigh on sentiment.
Agriculture
Drought conditions intensified, particularly in the western
part of the district. Contacts remained concerned about
the La Niña weather pattern and a dry winter diminishing
2021 crop prospects. The harvest was wrapping up for
2020 row crops, and prices pushed above breakeven
levels for most producers. The livestock sector was
facing headwinds of lower cattle prices and higher feed
costs. Contacts were more optimistic about the agricultural sector in general with stronger prices, solid export
demand, and a more hopeful economic outlook. Ŷ
Construction and Real Estate
Activity in the housing market remained robust. Home
sales continued to outperform expectations, particularly
in suburban locations, and inventories remained exceptionally tight. Builders said they were raising home prices
both to cover higher construction costs and to slow down
sales given the heavy backlogs. New home development
was active, and contacts noted that builders and developers were chasing land and lots. Outlooks were positive, with some concern about the impact on future sales
of rising COVID cases, tight lot supply, and a weak labor
market.
Apartment demand held steady. Elevated supply continued to put downward pressure on apartment rents. Office leasing remained weak and sublease space rose as
many firms continued to evaluate their space needs
given that a sizeable share of their employees continued
For more information about District economic conditions visit:
www.dallasfed.org/research/texas
K-2
Federal Reserve Bank of
San Francisco
The Beige Book ■ November 2020
Summary of Economic Activity
Economic activity in the Twelfth District expanded modestly on balance during the reporting period of October through
mid-November. Employment levels increased slightly on net, though the pace of job recovery slowed down in certain
regions. Wages increased marginally, whereas price inflation showed little to no change on balance. Sales of retail
goods rose appreciably, while conditions in the consumer and business services sectors remained unchanged overall.
Manufacturing activity expanded moderately, with capacity utilization rates increasing a bit. Conditions in the agriculture
sector also improved slightly. Residential real estate activity increased further, while commercial market conditions
changed little on net. Lending activity increased at a mild pace.
Employment and Wages
other consumer-facing businesses reported little to no
change in employee compensation. Employers in financial services and information technology mentioned
reconsidering their wage structures as employees work
remotely in areas with varying degrees of cost of living.
Employment levels increased slightly on net. A large
logistics and distribution firm with a national presence
reported continued strength in hiring activity, as did
construction and steel manufacturing firms. However,
employers in the financial and energy sectors reported
little to no change in their employment levels. In addition,
employment in the hotel, restaurant, and entertainment
industries remained well below pre-pandemic levels. In
California and the Pacific Northwest, the job recovery
pace slowed during the reporting period. A few contacts
in California and Washington noted an unusual uptick in
voluntary employee attrition, which they attributed to
various reasons including changes in childcare needs,
decisions to move out of state, or fear of contracting
COVID-19. Several employers expressed difficulty attracting qualified workers, especially in industries that
require employees to be on-site, such as payment processing companies, hotels, and food services. Some
contacts in financial services mentioned implementing
employee assistance programs and flexible work schedules to allow employees to coordinate with their managers ways to accommodate them to meet their children’s
schooling needs.
Wages increased marginally, although conditions varied
widely by industry. Wages continued to increase in construction and financial services. Several contacts in
California mentioned that the forthcoming change in the
minimum wage taking effect in the new year would result
in wage increases for most hourly workers. A wood
product manufacturer in the Pacific Northwest reported
plans to distribute year-end bonuses to reward employees for their efforts during the pandemic. Retail and
Prices
Price inflation showed little to no change on balance.
Contacts in wholesale retail, energy, and food services
reported stable prices. Prices of building and construction materials including wood products, wallboard, cement, and paint continued to be highly elevated. Increased demand from the automotive industry as well as
from foreign markets put upward pressure on prices of
recycled metals and steel products. In contrast, a few
hoteliers noted recently further downward pressure on
rates due to increased discounting by competitors. Prices for crops such as nuts, grapes, and stone fruits were
lowered mainly due to shipping constraints and export
tariffs.
Retail Trade and Services
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Retail sales rose appreciably over the reporting period.
Many retailers moved up their holiday marketing by
several weeks, and some have already benefited from
an earlier start for holiday shopping. Online sales continued to be strong, and demand for home improvement
goods, vehicles, delivery services and food products
increased further. A contact in Southern California noted
a recent spike in demand for bicycles. However, given
the recent rise in COVID-19 cases and stricter containment measures across the District, brick-and-mortar
stores expressed high uncertainty, with many being
cautious about stocking up for the holidays. Most retail-
Federal Reserve Bank of San Francisco
mained elevated, especially for raisins, nuts, and almonds. Domestic demand for logs and timber continued
to be strong, and demand from Asia increased. Several
contacts expressed concern over the short to mediumterm impact that wildfires could have on crops as well as
on wood supply.
ers expected the big shift to e-commerce to continue this
holiday season, while overall sales volume is expected
to be flat or slightly lower compared with last year. Several grocers reported intermittent supply issues and low
inventories of certain products.
Conditions in the consumer and business services sectors remained unchanged overall. Activity remained
strong in information technology, health care, and legal
services. Logistics and transportation services reported
continued strength in home deliveries and increasing
holiday shipments. A contact in Southern California
noted that demand for lodging in areas within easy driving distance of major metropolitan areas increased in the
fall, especially among younger people. However, weakening activity in leisure and travel industries began in
mid-October, and restaurants and hotels continued to
operate at fractional capacities. Furthermore, contacts
across the District expressed concern over renewed
containment measures, including shutting down or reducing capacities for indoor dining, gyms, movie theaters, and beauty services. One contact in Hawaii suggested that lower levels of tourism may be at least partially attributable to testing and quarantine protocols.
Real Estate and Construction
Residential construction activity continued to grow
strongly, supported by low interest rates and the current
telework environment. Contacts throughout the District
reported increased demand for new and existing homes,
especially in suburban areas and vacation home destinations, which kept inventories low and raised home prices
further. Activity in the multifamily property sector was
mixed, with lower rents and higher vacancies in metropolitan areas, while the opposite occurred in suburban
areas. Several contacts noted increases in construction
costs and longer project timelines due to labor shortages
and supply chain disruptions. A contact in the Pacific
Northwest noted that many people who were impacted
by the wildfires plan to rebuild their homes, which could
further spur demand for construction labor and materials.
Activity in the commercial real estate market was little
changed on net. Although commercial construction projects that began prior to the pandemic continued, new
development projects were put on hold. Demand for
commercial office and retail space continued to be weak
throughout the District. By contrast, demand for new
industrial and warehouse spaces increased in the Pacific
West. A contact in Washington noted plans for a large
new warehouse facility in their region.
Manufacturing
Manufacturing expanded moderately, with capacity
utilization rates improving. Demand for manufactured
wood products and building materials remained strong,
as residential construction continued its rebound. A
wood products manufacturer in the Pacific Northwest
reported most sawmills were operating at near capacity,
though still somewhat constrained by COVID-19, with
related staff shortages and challenges in acquiring raw
materials. Sales of recycled metals and fabricated steel
products increased further, underpinned by strong demand from the automotive industry. Although energy
usage by manufacturers has mostly rebounded from its
lows, it has slowed down somewhat, which one contact
attributed to a slowing recovery of the manufacturing
sector as winter approaches. Durable goods orders
increased robustly as businesses resumed investment,
though several contacts reported continued disruptions
to supply chains.
Financial Institutions
Overall lending activity increased at a mild pace. Most of
the demand continued to be for residential and commercial real estate loans, particularly refinancing. Demand
for auto loans continued to grow, albeit at a slower pace
as compared with the summer. Demand for commercial
and industrial loans edged down slightly, and utilization
of commercial lines of credit remained low. In contrast,
consumer lending activity has picked up a bit. Deposits
continued to grow at double-digit rates, and deposit rates
declined further. Banks noted strong asset quality, with
low delinquency rates and ample liquidity. Several contacts across the District expressed concern over potential loan losses in the coming months should payment
deferrals and mortgage forbearances no longer be extended. A contact in Southern California noted that capital markets and investment activities have rebounded in
recent months, especially in the sustainability and clean
technology areas. ■
Agriculture and Resource-Related Industries
Activity in the agriculture sector increased slightly. The
harvest for most agricultural crops, including grains and
potatoes, has been completed in the Pacific Northwest
and California, and ample water supply has contributed
to high yields. International demand for wheat, raisins,
and nuts has increased recently due to droughts in other
parts of the world as well as a slight depreciation of the
dollar. Despite the increase in exports, inventories re-
L-2
Cite this document
Federal Reserve (2020, December 15). Beige Book. Beige Book, Federal Reserve. https://whenthefedspeaks.com/doc/beige_book_20201216
@misc{wtfs_beige_book_20201216,
author = {Federal Reserve},
title = {Beige Book},
year = {2020},
month = {Dec},
howpublished = {Beige Book, Federal Reserve},
url = {https://whenthefedspeaks.com/doc/beige_book_20201216},
note = {Retrieved via When the Fed Speaks corpus}
}