The Federal Reserve reported Wednesday that US companies are experiencing soaring inflation, exacerbated by a shortage of goods, which is likely to affect consumers. in many areas.
In its periodic report known as the “Beige Book”, which provides a look at the country’s economic landscape, the central bank also reported that overall growth has “declined from slightly to a moderate pace,” amid growing health concerns. publishes during the July-August period covered by the report. .
“The slowdown in economic activity is in largely attributable to restaurant closures and travel and tourism bans in most regions, reflecting safety concerns due to the increase in the delta variable and, in some cases, to restrictions on international travel, “he said.
The report noted that inflation is “stable at a high pace”, with half of the Fed’s 12 counties reporting “strong” pressure and the other half saying inflation is “moderate”. However, the details of the report show that the problem is in growth, with the Fed’s preferred inflation measure showing a 3.6% increase in July, but most other measures are higher.
The report also states: “With widespread resource shortages, large-scale input price pressures persisted.”
Firms also reported a “significant increase in the cost of metals and mineral-based products, freight and transport services and building materials”, despite the decline in timber.
“Even with significantly higher prices, many companies have reported having difficulty identifying key input sources,” the report says, with some regions reporting that companies find it easier to pass on further cost increases through price increases. Several regions indicated that companies expect significant increases in sales prices in the coming months.
The release of the “Beige Book” comes as the Fed discusses whether to withdraw some of the extreme political accommodation it has introduced since the start of the pandemic. In particular, officials are considering reducing monthly bond purchases, possibly before the end of the year.
The report states that all regions experienced employment growth, with the unemployment rate dropping to 5.2% although it ranged from “light to heavy”, with business contacts citing a “significant labor shortage” despite growth. particularly “strong” wages. income earners, this is thearea the main one the Fed is addressing with the policy adjustment it passed a year ago.
The report stated that “employers use recurring increases, bonus, training and flexible work arrangements to attract and retain workers “.
On Wednesday, the Department of Labor reported job vacancies totaled 10.9 million in July. Despite this, hiring processes have changed little as companies face labor shortages.
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