WASHINGTON—Economic activity has expanded at a moderate pace since the middle of February even as consumer spending accelerated in retail and non-financial service firms as COVID-19 cases tapered across the country, according to new Beige Book data from the Federal Reserve.
Vehicle sales also remained largely constrained due to low inventories, while outlooks for future growth were clouded by the uncertainty of global political events and rising prices.
‘Economic Headwinds’
“The Federal Reserve’s latest Beige Book confirms that high input prices, labor shortages, and slow supply chains remain as economic headwinds,” said NAFCU Chief Economist and Vice President of Research Curt Long.
According to the Beige Book, many firms reported significant turnover as workers left for higher wages and more flexible job schedules.
“Growth is still solid, however, due to a strong labor market and rising income,” added Long. “The Fed will maintain its hawkish stance through at least the summer to try to rein in price growth.”
Other Findings
Other Beige Book insights include:
- Persistent labor demand fueled strong wage growth, particularly footloose workers willing to change jobs
- Inflationary pressure remained strong with firms continuing to pass swiftly rising input costs through to customers
- Contacts across Districts, particularly those in manufacturing, noted steep increases in raw materials, transportation, and labor costs
- Contacts in multiple Districts reported price spikes in energy, metals, and agricultural commodities following Russia’s invasion of Ukraine