Supply chain snarls, labor shortage slowing economic growth, Fed's Beige Book says
Fed: US economic recovery hampered by supply chain disruptions, labor shortages
U.S. economic growth slowed in the fall as supply chain disruptions and a growing labor shortage weighed on the still-nascent recovery from the coronavirus pandemic, according to a new Federal Reserve report.
In its region-by-region roundup of anecdotal information known as the Beige Book, the Fed reported that several districts noted that growth overall had cooled during the September through October period that the report covers.
"Several districts noted that the pace of growth slowed this period, constrained by supply chain disruptions, labor shortages, and uncertainty around the delta variant of COVID-19," the Fed said.
FED'S INFLATION GAUGE SOARS BY MOST IN 30 YEARS
The Beige Book also found "significantly elevated prices" across most districts, an increase fueled by rising demand for consumer goods and raw materials. Cost increases were widespread across industries and were largely driven by product scarcity and supply chain disruptions. Price pressures also stemmed from increased transportation and labor constraints, the Fed said, with the cost of steel, electronic components and freight rising rapidly.
"Expectations for future price growth varied with some expecting price to remain high or increase further while others expected prices to moderate over the next 12 months," the report said.
G-7 LEADERS HAMMER OUT A GLOBAL MINIMUM TAX FOR MULTINATIONAL COMPANIES
Inflation has accelerated as the economy recovers from last year's brief but extremely severe recession. Jerome Powell, the chairman of the U.S. central bank, has largely attributed the spike in consumer prices to pandemic-induced disruptions in the supply chain, a shortage of workers that's pushed wages higher and a wave of pent-up consumers flush with stimulus cash.
Powell has maintained the rise in inflation is likely "transitory" and has warned about the dangers of the Federal Reserve acting superfluously to lower the benchmark federal funds rate.
CLICK HERE TO READ MORE FROM FOX BUSINESS
The Beige Book comes just one week after the Labor Department released a report showing that inflation rose 5.4% in September from where it was a year ago, matching the largest increase since 2008. Consumer prices, meanwhile, jumped 0.4% in September from August.
The inflation spike appears poised to continue well into 2022: Economic projections from the Federal Reserve's two-day meeting in September show that headline inflation expectations for this year are 3.7% – almost a full point higher than the May forecast, when Fed officials projected it would hit 3%.