Atlanta Fed reports on COVID vaccinations, hiring, declining home affordability
By David Pendered
The Atlanta Fed’s anecdotal report on the region’s economy contained three key takeaways: COVID-19 vaccinations may be encouraged but not required by employers; most jobs are easy to fill; and home ownership affordability has declined.
This edition of the Beige Book was released Wednesday, the day before Federal Reserve Chairman Jerome Powell reaffirmed the Fed’s intent to continue a policy of super low interest rates. Powell made his remarks during a Jobs Summit sponsored by The Wall Street Journal.
The Atlanta Fed delivered its analysis in the second of eight installments of the 2021 Beige Book. The book is an economic portrait of the nation presented by the 12 regional Fed banks. The report released Wednesday is based on comments collected from contacts by the Federal Reserve on or before Feb. 22
Taking the takeaways in order:
- Vaccinations – “Many firms indicated that they planned to encourage employees to get the COVID-19 vaccine but at this point would not require it. Some contacts were offering paid time off to get the vaccine or were looking to provide the vaccine onsite.”
- Hiring – “Large leisure and hospitality firms reported a strong willingness from furloughed employees to return to work when called back. … [All firms] hiring indicated that most jobs were easy to fill with the exception of lower-skilled positions, nurses, and long-haul drivers. … Shortages of nurses, skilled trades workers, warehouse workers, and commercial drivers were putting upward pressure on wages in those occupations according to several contacts.”
- Home ownership: “ Demand for housing remained robust, inventories of new and existing homes fell, and home prices rose. … The District’s housing market maintained its momentum as rising home sales continued to be fueled by low interest rates. In many markets, sales increased sharply from a year ago. Inventory shortages were prevalent as available homes for sale did not keep pace with demand. New home construction also fell short of market demand, and shortages of lots, materials, and labor increased costs for builders. As a result, both existing and new home prices have experienced significant upward pressure. Though low rates have helped offset rising prices, home ownership affordability declined overall.”
On Tuesday, the National Association of Home Builders released its latest report on the rising cost of lumber. NAHB has been raising concerns since Spring 2020 about the effect of lumber costs. The report on Tuesday began with this observation:
- “The average price of a single-family home has risen more than $24,000 [since Spring 2020], and many clients are having to walk away because they can’t afford the increase. This fast price escalation is having far-reaching consequences throughout the industry, and prohibiting home builders and partner organizations from providing much-needed housing to families across the country.”
The San Francisco Fed reported the housing inventory is at historically low levels, and noted that the rising cost of materials was adding to the shortage of housing:
- “Home prices climbed further, which raised some concern among contacts in California and the Pacific Northwest about the decrease in affordable housing, especially in coastal metropolitan areas. Contacts across the District noted ongoing constraints due to shortages of construction labor, raw materials, and available land. As a result, several in the Pacific Northwest noted that construction projects are sold as soon as they are started, and most builders are at capacity.”