Economic activity in the U.S. has expanded at a modest to moderate pace since mid-January, according to the Federal Reserve’s Beige Book.
The Beige Book, a compilation of anecdotal evidence on economic conditions in each of the twelve Fed districts, noted that many districts reported that the surge in Covid-19 cases temporarily disrupted business activity as firms faced heighted absenteeism.
The spike in Covid-19 cases was also blamed for a temporary weakening in demand in the hospitality sector in some districts, while severe winter weather was also cited as disrupting activity.
The Fed noted consumer spending was subsequently generally weaker than in the prior report, which was released in early January.
While the Beige Book said manufacturing activity continued to grow at a modest pace, all districts noted that supply chain issues and low inventories continued to restrain growth, particularly in the construction sector.
The report also said employment increased at a modest to moderate pace, although widespread strong demand for workers remained hampered by equally widespread reports of worker scarcity.
With regard to inflation, the Beige Book said prices charged to customers increased at a robust pace across the nation, with a few districts reporting an acceleration in the pace of price growth.
Rising input costs were cited as a primary contributing factor across a broad swath of industries, the Fed said. Labor cost increases and ongoing materials shortages also contributed to higher input prices.
The release of the Beige Book comes two weeks before the Fed’s next monetary policy meeting on March 15-16, when the central bank is widely expected to raise interest rates.
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