New Beige Book Reports Shows Delta Variant’s Downer Economic Impact

National economic growth saw a slight dip this summer, almost entirely related to the emergence of Covid 19’s Delta variant.

So says the latest issue of the Beige Book, which is published eight times per year by the Federal Reserve Board.

The publication is a composite of anecdotal information provided by bankers, economists, and business leaders in the twelve Federal Reserve districts.

According to a summary of the most recent Beige Book findings, economic growth “downshifted slightly to a moderate pace in early July through August.”

The most buoyant sectors of the economy remain manufacturing, residential real estate, and transportation.  But a “deceleration” in general economic activity across the districts was largely due to a “pullback in dining out, travel, and tourism” in response to Delta’s increase.

Other sectors of the economy that have seen a decline or slowdown this summer were those “constrained by supply disruptions and labor shortages, as opposed to softening demand.”

The report noted, in particular, a decline in auto sales that appears to be entirely attributable to low inventories caused by the ongoing microchip shortage.

Residential construction, meanwhile, “was slightly up, on balance, and nonresidential construction picked up modestly.”

Reports from the 10th District, which takes in all of Colorado and northern New Mexico, noted at the same time increased concerns about the Delta variant and its economic impact that “economic conditions have continued to improve at a moderate pace.”

Contacts in the 11th District, including all of Texas and southern New Mexico, reported a “solid rate” of economic growth across all sectors. Although contacts in the district have remained generally optimistic, “surging Covid-19 cases have added uncertainty to outlooks.”

The 12th District, which includes all of Arizona, has seen an increase in both employment as well as wage and price growth this summer. Manufacturing and agriculture sectors in this district saw a slight summer increase, while “residential construction edged down somewhat.”

The report also noted that companies, primarily in the Midwest and West, have not only remained largely optimistic regarding economic trends, but have been offering increased bonuses and flexible work arrangements to attract more workers.

​By Garry Boulard

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