Highlights of the Fed's Beige Book:
- Four Districts described little or no growth
- Philadelphia and three of the four Midwestern Districts observed that activity began to slow in early November
- 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
- Nearly all Districts reported that employment rose, but for most, the pace was slow, at best, and the recovery remained incomplete
- Most districts reported modest to moderate increases of input price
- In several districts, firms feared that employment levels would fall over the winter before recovering further.
This isn't a great report. You wouldn't know it from financial markets but there's definitely a slowdown in the real economy. It's just that the market doesn't care about the current economy, it's all about the second half of 2021 now and the post-vaccine era.
