WASHINGTON—National economic activity expanded at a moderate pace from early April to late May, the latest Federal Reserve Beige Book shows, although it adds growth is at a somewhat faster rate than the prior reporting period.
According to the Beige Book analysis, the continuing supply chain disruptions have intensified cost pressures, but strengthening demand has allowed some businesses, particularly manufacturers, builders, and transportation companies, to pass through much of the cost increases to their customers. Looking forward, contacts anticipate facing cost increases and charging higher prices in coming months.
"The latest Beige Book focuses on the same trends that have been ubiquitous in the business press, namely a shortage of workers, supply chain constraints, and price increases," said NAFCU Chief Economist and Vice President of Research Curt Long. "Employers are ramping up hiring, which should further buoy consumer sentiment and spur consumption. Strong jobs data on Friday would pave the way for the FOMC to begin discussing the option at this month’s committee meeting.”
The Data Points
Among the Beige Book data points highlighted by Long:
- Overall, expectations changed little, with optimism that economic growth will remain solid
- The effects of expanded vaccination rates were most notable in consumer spending in which increases in leisure travel and restaurant spending augmented ongoing strength in other spending categories
- Wage growth was moderate, and a growing number of firms offered signing bonuses and increased starting wages to attract and retain workers