Supply bottlenecks and labor shortages have slowed US economic growth and contributed to a sharp rise in prices, the Federal Reserve said on Wednesday.
The constraints and shortage of goods caused “significantly elevated prices” in most areas of the country, the Fed said in its “beige book” report on economic conditions, which noted rising uncertainty about the outlook.
While economic activity increased at a “modest to moderate” rate over the last several weeks, in much of the country “the pace of growth slowed… constrained by supply chain disruptions, labor shortages, and uncertainty around the Delta variant of Covid-19,” the report said.
The analysis, based on discussions with business and community contacts in the central bank’s 12 regions, was prepared in advance of the Fed’s next policy meeting November 2-3. Despite again reporting the US pandemic recovery was losing steam, Fed officials are expected to announce plans to start to pull back on stimulus measures amid concerns about rising inflation. Fed Chair Jerome Powell has been saying for some time that the price spikes are expected to be transitory and retreat as pandemic-related disruptions are resolved, but economists increasingly are warning that they could become a lasting issue.
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