Fed's Beige Book Says Economy Expanded Modestly, Price Growth Moderate
A Federal Reserve report known as the Beige Book was released Wednesday and said economic activity expanded modestly from January to mid-February for most Fed districts.
The Beige Book, a compilation of economic evidence from the twelve Fed districts, also said most businesses remain optimistic regarding the outlook for the next 6-12 months as COVID-19 vaccines become more widely distributed.
The Fed described the district reports on consumer spending and auto sales as mixed while noting overall conditions in the leisure and hospitality sector continued to be restrained by ongoing COVID-19 restrictions.
The report also said most districts saw moderate increases in overall manufacturing activity despite challenges from supply chain disruptions.
With regard to employment, the Beige Book said most districts reported that employment levels rose over the reporting period, albeit slowly.
“Labor demand varied considerably by industry and by skill level, and many contacts noted continued difficulties attracting and retaining qualified workers,” the Fed said.
The report said labor supply shortages were most acute among low-skill occupations and skilled trade positions, with the constraints on labor supply including those related to COVID-19, childcare, and unemployment benefits.
On the inflation front, the Beige Book described the increase in non-labor input costs as moderate but highlighted notable increases in steel and lumber prices.
The Fed noted the rise in costs was widely attributed to supply chain disruptions and to strong overall demand.
Looking ahead, several Fed districts reported anticipating modest price increases over the next several months.
The release of the Beige Book comes two weeks ahead of the Federal Reserve’s next monetary policy meeting, which is scheduled for March 16-17.