US companies have been hammered by the fallout from the novel coronavirus outbreak as economic activity “contracted sharply and abruptly across all regions,” according to the Fed’s Beige Book released Wednesday.
The Fed’s latest check of businesses around the country was completed during March when the US went from worrying about risks posed by the coronavirus outbreak to most of the country being under some form of lock down order and millions losing their jobs.
“The hardest-hit industries because of social distancing measures and mandated closures were leisure and hospitality, and retail aside from essential goods,” the Fed said in the report in which the COVID-19 coronavirus was noted 93X’s.
“All Districts reported highly uncertain outlooks among business contacts, with most expecting conditions to worsen in the next several months,“ the Fed said in its Beige Book report, which surveys firms around the country.
The Fed has taken unprecedented action since early March to try and keep credit flowing to businesses and households by shoring up liquidity in financial markets. Numerous crisis-fighting programs have been launched and it has slashed interest rates to near Zero as well as resuming large-scale asset purchases.
Last week it announced a “Main Street” program that would make up to $600-B in loans available to mostly mid-sized companies but it would be another 3 wks until it is up and running, Fed Vice Chairman Quarles said Friday.
The US government also has a $349-B forgivable loan program for small businesses, but it will soon run out and need more from Congress.
Data released Tuesday showed that so far construction, professional services and manufacturing are among those topping the list of recipients.
Districts across the country reported a severe and broad impact, according to the Fed’s report.
The San Francisco Fed said there was a freeze on television and film production resulting in widespread layoffs in the entertainment sector
In the Cleveland Fed District, multiple firms in professional and business services said clients had delayed the implementation of new projects and canceled some already underway.
“No sector was spared,” said the Philadelphia Fed. “Rapidly rising joblessness has not made hiring easier, as contagion fears and child care needs keep workers at home. Prices tend to be falling, but the wage path is muddled, and firm outlooks are clouded by uncertainty.”
The increasing pain felt by US firms is being closely watched by Fed policymakers and economists as they try to forecast how quick the economic rebound will be once social distancing controls are lifted and businesses can re-open.
Note: Retail sales suffered a record drop in March and output at factories declined by the most since Y 1946, data released earlier Wednesday showed. Consumer spending accounts for 72% of US economic activity.
Wednesday, the major US stock market indexes finished at: DJIA -445.41 to 23504.35, NAS Comp -122.56 to 8393.18, S&P 500 -62.70 to 2783.36
Volume: Trade on the NYSE came in at 1.1-B/shares exchanged
HeffX-LTN’s over all technical outlook for the major US stock market indexes is Neutral with a Bullish bias, as 3 of our Key indicators are Very Bullish in here.
- NAS Comp -6.5% YTD
- S&P 500 -13..9% YTD
- DJIA -17.6% YTD
- Russell 2000 -29.1% YTD
Looking Ahead: Looking ahead, investors will receive the weekly Initial and Continuing Claims, Housing Starts and Building Permits for March, and the Philadelphia Fed Index for April Thursday.
Have a healthy day, Keep the Faith!