Skip to main content

Fourth District Beige Book

The Beige Book—officially known as the Summary of Commentary on Current Economic Conditions by Federal Reserve District—is produced eight times each year prior to Federal Open Market Committee (FOMC) meetings. The information in the Beige Book is gathered primarily through interviews with business people in each District, as well as from Federal Reserve Bank and Branch directors. The publication’s original purpose was to supplement official statistics with more current anecdotal accounts of the economic environment in order to assist policymakers during FOMC deliberations.

Summary of Economic Activity

The Fourth District's economy deteriorated further in the current reporting period after it contracted sharply in the previous period. Firms across a broad range of sectors reporting declines in customer demand. The shuttering of physical stores and reduced travel because of the coronavirus pandemic kept sales weak for retailers and hospitality establishments. Reduced foot traffic also hamstrung auto and home sales. Manufacturing orders declined, and producers slashed capital investments, although a number of contacts believe their current backlogs will tide them over until demand improves. The slower pace of construction activity, reduced manufacturing production, and weak consumer spending resulted in low cargo volumes. Relatively strong areas of economic activity included grocery sales and business lending. Firms responded to weak customer demand by reducing staff levels and in some case by cutting wages. Inflation pressures eased because of weak demand and lower commodity prices. A sizeable share of firms believed the worst declines in demand have passed. However, few expect a strong recovery given the uncertainty of the coronavirus's path.

Employment and Wages

Employment declined in a broad range of sectors as layoffs were widespread and hiring was limited to a handful of firms. Half of contacts reported decreasing staff levels during the current period, compared with about 40 percent that did so in March. Furthermore, only one-third of contacts who reduced staff levels expect to rehire close to the full number of separated staff when their businesses reopen. This expectation suggests employment is unlikely to climb back to pre-pandemic levels quickly after businesses reopen. Firms that held their staff levels flat tended to be in financial services, construction, real estate, or manufacturing. In several cases, firms in these sectors cited the Paycheck Protection Program as enabling employee retention. The few firms that increased staff included grocers, who saw an increase in at-home food demand and curbside pickup, and a couple of large banks that needed back-office support. Some retailers started to recall staff in limited numbers as businesses were allowed to reopen. One staffing firm reported that his clients were starting to increase hours or bring back workers who were laid off.

Multiple contacts in a variety of industries noted additional labor market challenges, including limited access to child care services keeping workers away from job sites, workers' requesting to stay home out of fear of the virus, and unemployment benefits that disincentivized workers from rejoining payrolls.

Overall, wage pressures were flat. Although the majority of firms left wages unchanged, one in five contacts reduced workers' pay, a marked increase from the number of contacts who did so in the previous period. Wage cuts were concentrated in retail, real estate, professional services, and civic organizations. Multiple contacts reported wage reductions of at least 10 percent for office workers or nonfurloughed staff. In cases in which wages increased, these increases tended to be for employees at a variety of banks, transportation firms, and manufacturers. These firms raised wages for people who continued to work on site, in a number of cases by $1 to $3 per hour.


Firms reported that input cost pressures eased because of lower prices for commodities such as oil, steel, copper, cotton, and resins. The few cost increases that were reported included those for meat and some inputs for manufacturing and construction firms for which pockets of supply-chains were temporarily disrupted. One in four firms reduced selling prices because of weak customer demand and lower commodity prices. This was the case notably among residential builders who offered discounts on homes, commercial real estate firms that reduced rents, and transportation firms that lowered their rates. Also, department stores and apparel retailers heavily discounted their prices.

Consumer Spending

Retail activity remained significantly lower than prepandemic levels. Restaurants saw dramatic reductions in revenue because of the closure of dine-in services. Also, a sharp decline in business travel significantly reduced hotel bookings. Department stores and apparel retailers saw deep reductions in sales because of the shuttering of physical stores and were unable to fill the gap with online sales. One auto dealer reported that the impact of COVID-19 has been "unprecedented," with total sales down 55 percent year over year. By contrast, grocers saw stronger demand as customers cooked more at home. Many contacts expect customer demand will improve somewhat as restrictions are lifted slowly. However, they feared consumer spending could be dampened if unemployment remained high and concerns about contracting the coronavirus lingered.


Manufacturing orders continued to slide. Several contacts noted that the shutdown of automotive production was particularly painful; others reported that they anticipated long-lasting and adverse impacts to the aerospace and energy sectors. More than two-thirds of contacts indicated that capacity utilization is below its normal range, citing lack of demand, inefficiency brought on by social distancing, and difficulty convincing employees that it is safe to come to work. Manufacturers believed the worst declines in demand may have passed in April, though the outlook for the rest of the year was still downbeat. Additionally, some contacts were optimistic that their current backlogs would tide them over until demand picks up again.

Real Estate and Construction

Construction activity fell for almost all residential and nonresidential construction firms. Backlogs for nonresidential builders, that were heretofore relatively large, diminished, with one builder's saying the pandemic caused 80 percent of the firm's backlog to be postponed. Real estate agents reported weaker home sales because of slower foot traffic. One custom home builder tried selling homes online with limited success. Demand from first-time home buyers weakened because of a weak job market, and although interest rates are low, potential buyers were having a harder time qualifying for credit. One housing agency reported increased demand for rental and utility assistance.

Looking ahead to the near-term, residential estate agents were more optimistic that single-family home demand would improve because of pent-up demand, low interest rates, and low inventories of homes. Also, a number of nonresidential builders expect delayed projects would come back online. Downside concerns included reduced infrastructure spending because of declines in state gasoline tax revenues. Also, higher education institutions are facing fiscal difficulties that could lead to canceled projects. Finally, commercial real estate firms worry that relatively high rates of nonpayment of rent and rent deferrals will linger and depress profits.

Financial Services

Reports from financial services companies were mixed. Bankers saw large numbers of business-loan requests and draws on lines of credit in the second half of March, and while this activity slowed somewhat in April, it remained robust. Several banks reported processing large numbers of Paycheck Protection Program loans. On the other hand, demand for consumer loans was down significantly outside of heightened activity in home mortgage refinancing. A wealth management advisor noted that economic uncertainty drove increased demand for his services; however, another contact reported dampened demand for insurance because of declines in business activity and vehicle miles driven.

Professional and Business Services

Customer demand for professional and business services was mixed. One online shopping consultant reported an increase in demand in recent weeks, as did another contact who provides legal and strategic advice. A corporate strategy advisor reported that customers have recently started enquiring about potential investment projects. By contrast, several contacts in a variety of industries such as advertising consulting, landscape development, robotics, and payroll support reported continuing subdued demand for their services.


Weaknesses in the manufacturing, construction, retail, and energy sectors resulted in weaker cargo volumes for freight companies. Contacts highlighted reduced auto and metal production as particular pain points. The difficulty for transportation firms is exacerbated by the fact that freight volumes were already soft going into the pandemic. The few bright spots in the sector are limited to cargo for groceries and local and short-haul transportation.