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Coronavirus Hitting Parts of US Economy, Fed Survey Finds

FILE - The Federal Reserve Board building on Constitution Avenue is pictured in Washington, March 19, 2019.
FILE - The Federal Reserve Board building on Constitution Avenue is pictured in Washington, March 19, 2019.

The Federal Reserve's latest nationwide survey of business conditions has found that the coronavirus outbreak has begun to affect tourism and disrupt manufacturing chains in parts of the United States.

The survey compiled by the Fed's 12 regional banks and released Wednesday found that growth through late February continued at a moderate rate. But it noted that concerns are rising about how the virus that began in China might affect the U.S. economy.

Tourism from China is being affected and American manufacturers are beginning to report supply chain delays, the report said.

The Fed's San Francisco regional bank reported that the COVID-19 outbreak has led to decreased demand for aircraft from China and other Southeast Asian nations. Some American solar equipment manufacturers have also experienced delayed shipments because of supply-chain disruptions.

The survey, known as the beige book, will be part of the discussion when Fed officials meet later this month to review interest rates.

Surprise cut

The Fed on Tuesday announced a surprise half-point cut in its benchmark rate to try to support the economy in the face of the spreading virus. The move, which pushed the Fed's policy rate down to a range of 1% to 1.25%, marked the largest cut since the 2008 financial crisis.

Some analysts believe the Fed will cut rates even further at this month's meeting, especially if the effects of the coronavirus have grown more serious by that time.

Federal Reserve Chairman Jerome Powell said at a news conference Tuesday that the Fed is ``hearing concerns from people — for example, in the travel business, the hotel business and things like that.''

Fed officials expect the impact to grow ``and that's one of the reasons we have come to the view that it would be appropriate for us today to move to support the economy, and that's what we have done,'' Powell said.