U.S. economic activity fell sharply due to coronavirus disruptions, Fed says

Economic activity declined sharply across the United States over the past several weeks, according to a Federal Reserve report released on Wednesday, reflecting the disruptions caused by the coronavirus pandemic.

The sharp plunge in economic activity recounted in the U.S. central bank’s latest measure of business activity across its 12 districts shed light on the depth of the economic pain generated by the coronavirus pandemic, which has led to an unprecedented downturn and a U.S. death toll approaching 100,000.

The Fed’s survey was completed mostly in April, when non-essential businesses were shut down in much of the country, and through mid-May, when some states started to loosen restrictions.

The U.S. central bank acted aggressively to bolster the economy as the novel coronavirus spread across the globe, leading to widespread business closures and a surge in job losses. More than 38 million Americans have filed for unemployment benefits over the past two months, and the U.S. unemployment rate soared to 14.7% in April.

Fed officials moved to soften the blow by cutting interest rates to near zero in March, launching a round of open-ended asset purchases and announcing a slate of emergency lending tools to support businesses and households.

A new “Main Street Lending Facility,” which will lend to medium-sized businesses, should begin disbursing funds within two weeks, Boston Fed President Eric Rosengren said on Sunday. The Fed is also setting up a facility that would lend to cash-strapped municipalities that are coping with diminished revenue because of the crisis. (Reporting by Jonnelle Marte Editing by Paul Simao)