On the Economy: Beige Book Blues

By at 27 May, 2020, 8:05 pm

by Raymond J. Keating-

The latest edition of the Federal Reserve’s Beige Book was released on May 27th. Looking at the information, you can unfortunately say that we’re suffering from serious “Beige Book Blues.”

Before getting into the information provided, let’s take a moment to note what the Beige Book actually is. It does not present the views of Fed officials, but instead is a case of the Fed gathering together assorted outside views. The Fed explains:

“Each Federal Reserve Bank gathers anecdotal information on current economic conditions in its District through reports from Bank and Branch directors, plus phone and in-person interviews with and online questionnaires completed by businesses, community contacts, economists, market experts, and other sources.”

The information that served as the basis of this report was gathered prior to May 18.

Economic activity was down across regions and sectors

As noted in the report, “Economic activity declined in all Districts – falling sharply in most – reflecting disruptions associated with the COVID-19 pandemic… Employment continued to decrease in all Districts, including steep losses in most Districts, as social distancing and business closures affected employment at many firms.”

What lies ahead?

Well, the Beige Book summed up the views this way: “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.”

This is understandable, as we are in uncharted territory. Matters on the economic ground, if you will, have been altered in perhaps previously unimaginable ways. But what hasn’t changed are sound economic principles, including how they apply to policymaking.

Fully reopening the economy and accelerating a recovery will require opening up opportunities for entrepreneurs, businesses and workers, and that can only be achieved by reining in government – such as through tax and regulatory relief, advancing free trade, and pulling back federal spending.

The road ahead will not be easy – especially when considering the continuing unknowns regarding this pandemic – but getting the policies right is crucial.

Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.


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