Companies in various areas of the country indicated that “Despite strong demand, growth was limited by supply chain disruptions and labor shortages”According to the Fed’s“ beige book ”survey of economic conditions.
However, the report said that “the outlook for general activity remained positive in most districts ”, although some noted“uncertainty on when supply chain and labor supply challenges would ease. “
Rising inflation is a major problem for the US central bank, and Fed Chairman Jerome Powell said he now sees a risk that price increases will continue for some time.
Additionally, Powell said he supports a faster rollback of the Fed’s stimulus policies, a measure that would open the door to raising interest rates earlier than expected.
Strong pent-up demand from US consumers as the US economy reopened after pandemic closures has posed a challenge for companies that have been struggling to obtain products and materials from foreign suppliers, which in many cases continue to face restrictions.
The auto industry was hit hard by a global shortage of major computer chipsBut shipping bottlenecks have been felt across the economy.
The Fed survey noted “moderate to robust” price increases, “with widespread price increases in all sectors of the economy”.
However, the survey noted that “greater availability of some inputs, in particular semiconductors and certain products of steel, led to alleviate some pressure on prices ”.
Strong demand means that companies have been able to raise prices with “little setback”said the Fed.
Companies continue to try to add workers to their payroll, but face “Persistent difficulties in hiring and retaining employees.”
The report was prepared ahead of this month’s meeting of the Fed’s monetary policy committee, which now economists expect you to decide to slow down your monthly bond purchases more quickly.
Once the bond purchase is complete, the central bank would be in a position to increase the benchmark interest rate, which it reduced to zero at the beginning of the pandemic.
(With AP information)