By Greg Robb
The outlook : The majority of the country saw “modest or moderate” economic growth since late October, but four Federal Reserve district banks said their regions had stumbled and were now experiencing “little or no growth,” according to the latest “Beige Book” survey released by the central bank on Wednesday.
The Philadelphia Fed and three of the four Fed banks in the Midwest found that activity began to slow in early November as COVID-19 cases surged.
What happened: While still positive, business contacts said their optimism has waned as the pandemic spread rapidly across the country. The sharp-rise in COVID-19 cases sparked labor supply problems, including absenteeism and attrition, the survey found. Many districts said they fear employment levels would fall over the winter before recovering.
Big picture: The results of the survey fit with growing concern about the economic outlook. Growth is decelerating in the fourth quarter and there are fears there could be a contraction in activity in the January-March quarter.
Manufacturing, homebuilding and distribution were bright spots though.
Banks are worried about a potential increase in loan delinquencies next year.
What are they saying? “This is one of the most troubling Beige Books we have seen in a long time,” said Tom Simons, an economist at Jefferies.
Market reaction: The S&P 500 index /zigman2/quotes/210599714/realtime SPX +0.81% notched another record close on Wednesday as investors looked past the short-term economic difficulties, instead focusing on a potential return to a more normal economy in the second half of 2021 , as COVID-19 vaccines are expected to become widely available. After sharp gains to begin the week, the Dow Jones Industrial Average /zigman2/quotes/210598065/realtime DJIA +0.38% closed up 59.87 points.