The Federal Reserve’s May 2020 Beige Book economic conditions summary, prepared using data collected on or before May 18th, found economic activity declining in all districts and falling sharply in most of them. Activity declined in all sectors, with leisure and hospitality being hit especially hard. While wages were flat or declined in general, they increased in high-demand and essential sectors in most districts. Some employers cited challenges in returning workers from layoffs that included continued health concerns, limited childcare access, and generous unemployment benefits. Consumer demand was weak, and prices were steady to moderately down, although increased demand for some grocery items and personal protective equipment led to higher prices for those items. Contacts expressed hope that business reopenings would lead to increased activity, but most were pessimistic about the pace of a future recovery.

The second estimate of Q2 GDP was revised downward from a -4.8% contraction to a -5.0% contraction as a steeper drop in private inventory investment was somewhat offset by smaller than previously estimated declines in consumer spending and nonresidential fixed investments. The downward revision to private inventory was primarily due to drops in nondurable goods manufacturing and wholesale trade inventories, which were led by petroleum products. The upward revision to consumer spending was mostly due to increases for food and beverages, light truck purchases, and healthcare spending, while spending on gasoline, international travel, and food services dropped further than previously forecast. Corporate profits decreased by $295.4 billion for Q2, with domestic financial corporation profits dropping -$67.4 billion, domestic nonfinancial corporation profits dropping -$169.5 billion, and rest of the world profits dropping -$58.6 billion.

Personal income rose +10.5% (+$1.97 trillion) in April, with after tax disposable personal income up +$2.13 trillion. Worker compensation fell -$878.5 billion, after a -$374.6 billion drop in March, and the increase in income was entirely due to increased government benefits (+$2.99 trillion). The savings rate rose from 12.7% in March to 33% (+$4.04 trillion) in April, and personal outlays dropped by -$1.91 trillion. Consumer prices were down -0.5% compared to March, and only up +0.5% for the year vs a +1.3% yearly increase in March. Core prices, which exclude food and energy, were down -0.4% compared to March, and up +1.0% for the year vs +1.7% in March.