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Fed's Beige Book Notes Economic Activity Remains Well Below Pre-Pandemic Levels

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While U.S. economic activity increased in almost all Federal Reserve districts in recent weeks, the central bank's Beige Book noted activity remained well below where it was prior to the COVID-19 pandemic.

The Beige Book, a compilation of anecdotal evidence on economic conditions in the twelve Fed districts, indicated the recent increase in economic activity came as consumer spending picked up as many non-essential businesses were allowed to reopen.

Retail sales rose in all Fed districts, with a rebound in vehicle sales leading the way along with sustained growth in the food and beverage and home improvement sectors.

The Fed said leisure and hospitality spending also improved in recent weeks but remained far below year-ago levels.

Most districts reported that manufacturing activity improved from a very low level, while demand for professional and business services also increased in most districts but was still weak.

The Beige Book also said employment increased in almost all districts as many businesses reopened or ramped up activity, with districts highlighting gains in the retail and leisure and hospitality sectors.

However, the report said payrolls were well below pre-pandemic levels and job turnover rates remained high, as contacts across districts reported new layoffs.

Prices were little changed overall, the Fed said regarding inflation, with contacts across districts largely reporting both input and selling prices were flat.

Looking ahead, the Fed said outlooks remained highly uncertain, as contacts grappled with how long the COVID-19 pandemic would continue and the magnitude of its economic implications.

The release of the Beige Book comes two weeks ahead of the Fed's next monetary policy meeting scheduled for July 28-29.

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