By Yasin Ebrahim
Investing.com – The economy continues to make up ground, but there doesn't appear to be any end to the shortage in labor supply at a time when costs are rising amid supply chain issues that look set to continue, according to the Federal Reserve's Beige Book released Wednesday.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through July 2, showed the economy continued its recovery, but rising inflation and labor supply shortages have persisted.
"The U.S. economy strengthened further from late May to early July, displaying moderate to robust growth," according to the Fed's Beige Book. "The outlook for demand improved further, but many contacts expressed uncertainty or pessimism over the easing of supply constraints."
Some businesses, meanwhile, appear to feeling the pressure from struggles to fill jobs. "Labor shortages were often cited as a reason firms could not staff at desired levels, with firms in three Districts delaying expansion or scaling back services due to understaffing," the report said. This dearth of labor supply doesn't appear to be on the wane anytime, with firms in several districts expecting "the difficulty finding workers to extend into the early fall," it added.
The inflation numbers “have been higher than expected and hoped for, but they're actually still consistent with what we've been talking about,” Powell said in his semi-annual testimony before the House Financial Services Committee. “[I]t's just the perfect storm of high demand and low supply, and it should pass.”