The economy has continued to strengthen with moderate to robust growth since late May, but ongoing shortages in labor and supplies have persisted, the Federal Reserve found in its July Beige Book report.
“Supply-side disruptions became more widespread, including shortages of materials and labor, delivery delays, and low inventories of many consumer goods,” the report stated, adding that “the outlook for demand improved further, but many contacts expressed uncertainty or pessimism over the easing of supply constraints.”
The summary on current economic conditions also reported that prices increased at “an above-average pace,” with seven of the Fed’s 12 districts reporting strong price growth and the remaining areas seeing moderate gains.
With inflation continuing to surge, the Fed reported that while some contacts still believe the ongoing rise in prices is transitory, a majority of the officials surveyed expect input costs and selling prices to climb further in the coming months.
On the same day of the Beige Book’s release, Federal Reserve Chairman Jerome Powell spoke to Congress, acknowledging in his remarks to lawmakers that “Inflation has increased notably and will likely remain elevated in coming months before moderating.”
Powell also signaled that the Fed is “a ways off” from tapering economic support, sending stocks higher following his comments.