WASHINGTON (Pakistan Point News / Sputnik - 28th May, 2020) The outlook for the US economy remains highly uncertain despite the country's emergence from COVID-19 lockdowns, and most leaders of industry are pessimistic about the rate of recovery, the Federal Reserve said in its monthly Beige Book report on Wednesday.
"Economic activity declined in all districts - falling sharply in most - reflecting disruptions associated with the COVID-19 pandemic," the Fed said in the report compiled with inputs from its central banks in 12 US districts. "Although many contacts expressed hope that overall activity would pick-up as businesses reopened, the outlook remained highly uncertain and most contacts were pessimistic about the potential pace of recovery."
The Fed said consumer spending fell further over the past month due to mandated closures of retail establishments during the height of the US outbreak of the pandemic, which has so far infected nearly 1.7 million Americans while killing almost 100,000. US retail sales fell 16.4 percent in April, its worst monthly performance ever, due to a virtual crippling of the economy by COVID-19 lockdowns.
"Declines were especially severe in the leisure and hospitality sector, with very little activity at travel and tourism businesses," the Fed's Beige Book report said. "Auto sales were substantially lower than a year ago, although several Districts noted recent improvement. A majority of Districts reported sharp drops in manufacturing activity, and production was notably weak in auto, aerospace, and energy-related plants."
Residential home sales also plunged, due in part to fewer new listings and to restrictions on home showings in many areas, while construction activity fell as new projects failed to materialize in many districts, the report said.
On the commercial real estate front, a large number of retail tenants reported deferred or missed rent payments while bankers reported strong demand for the government's paycheck protection loans.
"Agricultural conditions worsened, with several districts reporting reduced production capacity at meat-processing plants due to closures and social distancing measures. Energy activity plummeted as firms announced oil well closures, which led to historically low levels of active drilling rigs," the report added.
Nearly 40 million Americans have lost their jobs due to the COVID-19 and the pandemic has caused the US economy to shrink 4.8 percent in the first quarter of the year, the sharpest such decline since the Great Recession of 2008/09, data showed. While all 50 states in America have reopened most of their economy over the past two weeks, economists still warn of a sharp recession for the second quarter, meaning more hardship� to come.
