Fed’s Beige Book Says U.S. Economy Expanded Moderately, Inflation Remains Strong
With the Federal Reserve’s next monetary policy meeting looming, the central bank released its Beige Book on Wednesday.
The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, said U.S. economic activity has expanded at a moderate pace since mid-February.
The Fed noted consumer spending accelerated among retail and non-financial service firms, as Covid-19 cases tapered across the country.
Manufacturing activity was also described as “solid overall,” although the Fed said labor market tightness and elevated input costs continued to pose challenges on firms’ abilities to meet demand.
The elevated input costs came as inflationary pressures remained strong, with firms continuing to swiftly pass rising costs on to customers.
While firms were generally allowed to pass through higher input cost to customers due to strong demand, the Fed noted some districts saw negative sales impacts from rising prices.
With regard to the labor market, the Fed said employment increased at a moderate pace, as demand for workers continued to be strong across most districts and industry sectors.
However, the central bank said hiring was held back by the overall lack of available workers, with higher wages doing little to alleviate widespread job vacancies.
The release of the Beige Book comes two weeks before the Fed’s next monetary policy meeting on May 3-4, when the central bank is widely expected to raise interest rates by another 50 basis points.
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