Fed survey finds a hobbled economy

Respondents report tepid growth in recent weeks and uncertainty about the future.

A Federal Reserve survey of business conditions around the country found that the U. S. economy grew at a “slight to modest” pace in September and early October, but it also documented many areas of economic activity hobbled by the COVID- 19 pandemic.

The Fed report made public Wednesday said that the pace of activity varied greatly among sectors of the economy.

Housing demand showed solid gains, helped by low mortgage rates, but conditions in commercial real estate continued to deteriorate. That sector has been hurt by the closing of thousands of restaurants and other retail establishments.

The report, known as the Beige Book, said that the outlook among the central bank’s business contacts remained generally optimistic but that respondents expressed “a considerable degree of uncertainty” about the future.

“Restaurants in many districts expressed concern that cooler weather would slow sales as they have relied on outdoor dining,” the Fed report said.

It said banks were also worried about rising delinquency rates in coming months. Analysts are concerned about foreclosures on home mortgages and commercial real estate after support payments for individuals and businesses expired in late July or August.

The report said that although consumer spending, which accounts for twothirds of economic activity, remained positive, some districts reported a leveling off in retail sales, which could be linked to the expiration of the support programs.

The Fed report was based on responses gathered by the Fed’s 12 regional banks before Oct. 9. The information will be used when the Fed holds its next meeting to set interest rates Nov. 4 and 5.

The expectation is that the Fed will keep its key rate unchanged at the current ultra- low level of 0% to 0.25% and keep signaling that it intends to keep rates at that low level through 2023.

However, the central bank may feel the need to go even further in providing economic support if a new wave of virus cases is threatening to throw the recovery into reverse.