WASHINGTON — Economic activity and retail sales growth in October and early November expanded at a “measured pace,” stemming from disruptions caused by Hurricane Sandy on the East Coast and uncertainty about the fiscal cliff, the Federal Reserve said Wednesday its Beige Book report.
Businesses in New York and Philadelphia reported “weaker conditions” due to Hurricane Sandy, which slammed the East Coast at the end of October and caused “widespread disruptions” into November, the Fed said.
“Retail sales are reported to have been ahead of plan in October, but exceptionally weak in early November in the New York City area, mainly due to widespread power outages, store closings and accessibility problems for both customers and workers,” the Fed said.
The storm’s effects were limited in Boston and Richmond. Merchants in Cleveland, Richmond, Atlanta, Chicago, Kansas City, Dallas and San Francisco said sales grew at a modest pace.
“Contacts in a number of districts expressed concern and uncertainty about the federal budget, especially the fiscal cliff,” the Beige Book said.
Retailers in Boston, Cleveland and Chicago said they were uncertain about holiday sales because of the potential for tax increases in conjunction with the talks in Washington over reining in the national debt and averting the fiscal cliff, generally defined as a package of sharp tax increases and deep spending cuts that will take effect at the beginning of next year if Congress fails to reach a deal to avert it.
However, some retailers in the regions covered by the Beige Book remained positive about the holiday season. Retailers in New York said they anticipated recovering lost sales from Hurricane Sandy during the holiday season. The holiday outlook for retailers in Philadelphia also “remained bright overall,” the report said.
“With the holiday sales season coming up — and with many residents in the region needing to replace destroyed or damaged property — all of the lost sales are expected to be made up in the weeks ahead,” the report said.
Retailers in Boston said they were positioning their businesses for increased Internet sales, while retailers in Minneapolis generally said they expect strong holiday sales. Merchants in Atlanta said they were bullish on holiday sales, based on the recent uptick in consumer confidence.
“Retailers [in Atlanta] anticipate a healthy holiday season and most shared plans to hire the same amount of seasonal staff compared with last year,” the report said.