Bostic expects ‘extremely uneven’ recovery

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The economic recovery following the shutdown to prevent the spread of the coronavirus is underway, but will be “extremely uneven in its pace,” according to Federal Reserve Bank of Atlanta President Raphael Bostic.

This recession is unlike any in “maybe a hundred years,” he said. “It is different because it’s is a public health issue first and foremost but also the impact in terms of dynamics in much different,” Bostic told the Florida Philanthropic Network virtually on Monday morning. Usually, recessions impact the middle class the most, but this time around, it was the lower-class, essential workers that got hit the most. And it has also had a tremendous impact on small businesses and specific sectors."

Raphael Bostic, president of the Federal Reserve Bank of Atlanta

Recovery is underway despite the fact that the virus is not yet under control. “This is lasting a lot longer than anyone we thought and now the horizon in terms of how long we think this is going to last, has extended,” he said. “New news will reset expectations and recovery will take a lot longer than people [originally] expected. Recovery is going to be extremely uneven in its pace.”

Dallas Fed manufacturing
Manufacturing activity in the Texas region “expanded” in August, according to the Federal Reserve Bank of Dallas’ manufacturing sector survey released on Monday.

Current conditions for the general business activity reversed to positive 8 in August from negative 3 in July, while the company outlook index climbed to 16.6 from 5.9.

The outlook uncertainty index dropped to 8.2 from 20.9.

The production index slid to 13.1 from 16.1, new orders rose to 9.8 from 6.9, growth rate of new orders increased to 11.8 from 1.3 and delivery time gained to 7.1 from 3.2.

The six-months forward looking general business activity index almost doubled to 20.4 from 10.6, while the forward looking company outlook index jumped up to 27.8 in August from 18.7 in July.

The forward looking production index grew to 43.0 from 37.2, new orders jumped to 42.5 from 38.6, growth rate of new orders increased to 39.2 from 30.4 and delivery time gained to 7.1 from 4.8.

“The manufacturing recovery continued in Texas, with demand and production increasing in August,” according to Dallas Fed senior business economist Emily Kerr. “More than two-thirds of manufacturers say business is still down from normal levels, by about 30% on average. New orders accelerated further, and sentiment about broader business conditions turned positive for the first time since the onset of the pandemic.”

Chicago Fed Midwest index
The Federal Reserve Bank of Chicago's Midwest Economy Index suggested improvement, although economic activity remained “well below trend” through July.

The MEI narrowed to negative 3.60 in July from negative 9.54 in June, while the relative MEI climbed to negative 3.86 in July from negative 6.51 in June.

All sectors and states in the region contracted in the month.

Milwaukee-ISM
The Institute of Supply Management-Milwaukee PMI rose to a seasonally adjusted 51.37 in August from 44.90 in July and 43.49 in June.

New orders rose to 58.15 from 46.11, production increased to 50.61 from 42.00 while employment gained to 49.65 from 36.69.

Supplier deliveries slipped to 58.86 from 62.25, inventories edged up to 39.56 from 37.46 and prices inched up to 54.55 from 54.17.

The blue collar index grew to 49.7 in August from 40.8 in July, while the white collar index improved to 45.1 from 40.8.

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Monetary policy Raphael Bostic Federal Reserve Bank of Atlanta Economic indicators Federal Reserve Bank of Chicago Federal Reserve Bank of Dallas COVID-19 Coronavirus Manufacturing industry
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