By Yasin Ebrahim
Investing.com – U.S. economic activity increased but remained to be well below pre-coronavirus pandemic levels, a Federal Reserve survey showed.
The central bank’s economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through July 6, flagged the coronavirus-led hit to the economy and signaled that the outlook continued to remain uncertain.
"Outlooks remained highly uncertain, as contacts grappled with how long the COVID-19 pandemic would continue and the magnitude of its economic implications," the Fed's report showed.
Despite the sharp recovery in job hiring in recent months, the report highlighted that employees were reluctant to return to work amid safety concerns and generous unemployment benefits.
Employment increased in almost all districts, led by retail and leisure and hospitality sectors, but contacts in nearly every District "noted difficulty in bringing back workers because of health and safety concerns, childcare needs, and generous unemployment insurance benefits."
The pace of inflation, one of key driving forces that will determine the Fed's next policy move, remained roughly unchanged. "Contacts across Districts largely reported both input and selling prices were flat .. though several Districts "reported that supply chain challenges were pushing up prices for health and safety equipment used to limit the spread of Covid-19," according to the report.
Fed officials have continually warned that the economic outlook will remain uncertain even if the spread of coronavirus infections slows.
“The recent resurgence in Covid cases is a sober reminder that the pandemic remains the key driver of the economy’s course,” said Federal Reserve Governor Lael Brainard said on Tuesday. "A thick fog of uncertainty still surrounds us, and downside risks predominate,"