Fed’s Beige Book Says U.S. Economic Activity Unchanged, Prices Remain Elevated

Economic activity in the U.S. has been essentially unchanged since early July, according to the Federal Reserve’s Beige Book released on Wednesday.

The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, noted five districts reported slight to modest growth in activity and five others reported slight to modest softening.

The Fed said most districts reported steady consumer spending, as households continued to shift spending away from discretionary goods and toward food and other essential items.

Manufacturing activity grew in several districts, according to the report, although there were some reports of declining output as supply chain disruptions and labor shortages continued to hamper production.

The Beige Book said supply chain bottlenecks for critical components also constrained energy production but noted demand for energy products remained robust.

With regard to inflation, the Fed said prices remained highly elevated, with substantial price increases reported across all districts, particularly for food, rent, utilities, and hospitality services.

However, the report noted nine districts reported some degree of moderation in rate of price growth in recent months.

The Beige Book also said employment rose at a modest to moderate pace in most districts. Overall labor market conditions remained tight, the Fed said, although nearly all districts highlighted some improvement in labor availability.

Looking ahead, the Fed said the outlook for future economic growth remained generally weak, with contacts noting expectations for further softening of demand over the next six to twelve months.

The Beige Book is typically released two weeks ahead of the Fed’s next monetary policy meeting. The next Fed meeting is scheduled for September 20-21.

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