The Fed’s analysis of the US business environment revealed modest economic growth at the start of the year, although some regions of the country are declining due to a new surge in COVID-19.
The Fed report notes that most of the 12 banking districts have reported modest increases in economic activity in recent weeks.
However, three counties – New York, Philadelphia and Cleveland – reported a decrease in activity.
Two counties, St. Louis and Kansas City, reported that activity has generally remained unchanged since the last Fed meeting in mid-December.
The Fed said reports on consumer spending, which account for 70 percent of economic activity, were mixed.
Some counties reported a drop in retail sales and demand for hospitality and leisure services as local authorities tightened restrictions in an attempt to contain the spread of the virus.
“While the outlook for COVID-19 vaccines has bolstered business optimism for growth in 2021, it is constrained by concerns about the recent increased activity of the virus and its implications for the business environment in the short term,” the Fed said.