Fed: US economic recovery hampered by supply chain disruptions, labor shortages
we Economic Growth slowed in the fall as supply chain disruptions and growing labor shortages weighed on the still-nascent recovery coronavirus According to a new report from the Federal Reserve.
In its sector-by-sector roundup of anecdotal information known as the Beige Book, the Fed reported that several districts noted that overall growth had cooled during the September to October period that the report includes.
“Several districts noted that growth slowed in this period, constrained by supply chain disruptions, labor shortages and uncertainty around the delta version of COVID-19,” the Fed said.
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The Beige Book also found “considerably high prices” in most districts, an increase fueled by increased demand for consumer goods and raw materials. Cost escalation was widespread across industries and was largely driven by product shortages and supply chain disruptions. The Fed said price pressure also stemmed from increased transportation and labor barriers, with the cost of steel, electronic components and freight rising sharply.
“Expectations of future price increases vary, with some expecting prices to remain higher or move higher, while others expect prices to moderate over the next 12 months,” the report said.
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Inflation has picked up as the economy recovered from last year’s brief but extremely severe recession. US central bank President Jerome Powell has largely attributed the spike in consumer prices to pandemic-induced disruptions in the supply chain, labor shortages that push wages higher and a wave of consumers flushing with stimulus cash. Is.
Powell maintains that the increase in inflation is likely to be “temporary” and warned about the dangers of the Federal Reserve acting unnecessarily to lower the benchmark federal funds rate.
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The beige book comes just a week after the Labor Department released a report showing inflation rose 5.4 percent in September from a year earlier, matching the biggest increase since 2008. Meanwhile, consumer prices rose 0.4% in August to September.
The inflation spike is set to continue well into 2022: Economic projections from the Federal Reserve’s two-day meeting in September show headline inflation expectations for this year are at 3.7% — nearly a full point higher than May’s forecast, That’s when Fed officials anticipated it. 3% will be killed.