WASHINGTON—The Federal Reserve's latest Beige Book reveals the U.S. economy downshifted slightly to a moderate pace in early July through August.
"The Federal Reserve’s Beige Book does not stray from the narrative that supply and worker shortages are hampering the recovery," said NAFCU Chief Economist and Vice President of Research Curt Long. "Despite elevated price growth, the slowdown in hiring in August means that a rate hike is nowhere in view yet."
According to the Beige Book, the deceleration in economic activity was largely attributable to a pullback in dining out, travel, and tourism in most Districts, reflecting safety concerns due to the rise of the Delta variant, and, in a few cases, international travel restrictions.
Disruptions & Shortages
The other sectors of the economy where growth slowed or activity declined were those constrained by supply disruptions and labor shortages, as opposed to softening demand. Weakness in auto sales was widely ascribed to low inventories amidst the ongoing microchip shortage, and restrained home sales activity was attributed to low supply.
Looking ahead, the Beige Book found businesses in most Districts remained optimistic about near-term prospects, despite the aforementioned widespread concern about ongoing supply disruptions and resource shortages.
Also Worth Noting
Other notable insights from the latest Beige Book, according to Long, include:
- Demand for workers continued to strengthen, but all districts noted extensive labor shortages that were constraining employment and, in many cases, impeding business activity
- Some districts reported that businesses are finding it easier to pass along more cost increases through higher prices
- Several districts indicated that businesses anticipate significant hikes in their selling prices in the months ahead