Fed’s Beige Book Shows Modest U.S. Recovery as Job Growth Slows

Activity in the U.S. economy showed signs of increasing modestly at the end of 2020, while the pace of job growth slowed as resurgent infections curbed movement just as vaccinations began, theFederal Reserve said.

“Some districts noted declines in retail sales and demand for leisure and hospitality services, largely owing to the recent surge in Covid-19 cases and stricter containment measures,” according to the Beige Book based on information collected by the Fed’s 12 regional banks through Jan. 4.

“Although the prospect of Covid-19 vaccines has bolstered business optimism for 2021 growth, this has been tempered by concern over the recent virus resurgence and the implications for near-term business conditions,” the Fed said in the survey released Wednesday in Washington.

New coronavirus infections surged at the end of 2020 and into the new year. Coupled with the start of winter in much of the country, people engaged in less activity.

The report covers a period that saw the start of widespread vaccinations, but with just atiny portion of the population inoculated so far, the impacts on the economy aren’t yet visible.

Several Fed officials have said broad vaccination will boost the economy in the second half of the year. Dallas Fed President Robert Kaplan expects5% growth in 2021, bolstered by inoculations, and Boston’s Eric Rosengrensaid Wednesday that widespread vaccination could underpin a significant pickup in consumption. Atlanta’s Raphael Bostic has said distribution has started slowly and further delays would be asetback to the hoped-for strong recovery.

The U.S. economylost 140,000 jobs in December in the first payrolls decline in eight months, Labor Department figures show. The drop was driven by losses at restaurants and bars amid renewed restrictions in some parts of the country to help stem soaring virus infection rates.

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