FED REPORT SEES U.S. ECONOMY BEGINNING TO RECOVER


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The U.S. Federal Reserve’s “Beige Book,” a collection of business anecdotes and comments the central bank publishes eight times a year, confirms signs of an economic recovery and finds businesses’ optimism returning, according to the edition released on 3 March.
“Economic activity expanded modestly from January to mid-February,” the Fed reported, and “most businesses remain optimistic regarding the next six to 12 months,” although hotels, restaurants, and other businesses in leisure and entertainment “continue to be restrained by ongoing COVID-19 restrictions.”
Manufacturing expanded somewhat despite continuing glitches in logistics and supply chains, the Fed found.
The U.S. economy grew in eight of the Fed’s 12 geographic regions, with the Northeast showing mixed results. The New York City area’s economy contracted slightly, with greater Boston showing variations across economic sectors.
TREND FORECAST: As we have detailed, the economic growth trajectory will continue to expand as stimulus money is pumped into the economy. Absent a wild card – such as spiking oil prices, military conflicts, natural disasters, etc. – there will be strong economic growth in the coming several months. Along with rising economic growth, we maintain our forecast for rising inflation, which may, in turn, reverse the Federal Reserve’s zero-interest-rate policy. 

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