Amid ongoing Congressional testimony by Federal Reserve Chair Jerome Powell on Wednesday, the central bank also released its Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts.
The Beige Book noted the U.S. economy strengthened further from late May to early July, with the pace of growth described as moderate to robust.
The transportation, travel and tourism, manufacturing, and non-financial services sectors reported above-average growth, while energy markets improved slightly, and agriculture had mixed results.
The report said supply-side disruptions became more widespread during the period, including shortages of materials and labor, delivery delays, and low inventories of many consumer goods.
Powell told the House Financial Services Committee that production bottlenecks and other supply constraints in certain sectors have contributed to a notable increase in inflation, with the Beige Book noting prices have increased at an above-average pace.
The Beige Book described pricing pressures as broad-based, with more acute pricing pressures seen in the hospitality sector, as the reopening of hotels and restaurants confronted limited supplies of materials and workers.
“While some contacts felt that pricing pressures were transitory, the majority expected further increases in input costs and selling prices in the coming months,” the Fed said.
The report also said three-quarters of the Fed districts reported either slight or modest job gains, while the remainder reported moderate or strong increases in employment.
Labor shortages were often cited as a reason firms could not staff at desired levels, the Beige Book said, with firms in several districts expecting the difficulty finding workers to extend into the early fall.
Looking ahead, the Beige Book said the outlook for demand continued to improve but noted many contacts expressed uncertainty or pessimism over the easing of supply constraints.
The release of the Beige Book comes two weeks ahead of the Fed’s next monetary policy meeting, which is scheduled for July 27-28.
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