Fed Beige Book: Prices have risen strongly due to strong demand and supply chain disruption | Anue Juheng-US Stocks

According to the Economic Beige Book published by the Federal Reserve Commission (Fed) on Wednesday (1st), the U.S. economy grew at a “moderate to moderate” rate from early October to the first half of November. However, it suffered from supply chain disruptions and labor shortages. Prices have generally risen.

The Fed mentioned in the Beige Book report: “Due to strong demand for raw materials, logistics challenges, coupled with a tight labor market, the cost of corporate input has risen extensively, causing prices in all fields to rise at a “moderate to strong” rate. “

This report adjusted the data collected by 12 regional Federal Banks. The statistical time was as of November 19 and was compiled by the Chicago Federal Bank.

The report shows that the outlook for economic activity in most regions is still optimistic, but there is still uncertainty about when supply chain disruptions and labor market tensions will ease.

Higher and longer-lasting inflation has caused the Fed to consider ending its bond purchase plan early. The Fed announced in early November that it would begin to reduce the size of its debt purchases by US$15 billion each month, and it is scheduled to end its debt purchase plan in mid-2022. The Federal Open Market Committee (FOMC) will meet again in mid-December and may decide to expedite the end of debt purchases at that time.

In the current high-inflation environment, Fed Chairman Bauer said earlier on Wednesday that it is appropriate to discuss at the next meeting whether the debt purchase plan should be terminated more quickly.

The Beige Book report also mentioned that leisure and accommodation activities in most areas have begun to heat up, mainly because the epidemic caused by the new crown variant virus Delta has begun to subside in various areas.

However, the results of the Beige Book only reflect the situation before mid-November, when the new variant virus Omicron had not yet appeared, and the virus may threaten the recovery of the service industry in the next few months.

In terms of the job market, almost all Federal Banks mentioned strong salary growth, mainly due to the difficulty in recruiting manpower and the high turnover rate, which forced companies to raise salaries in order to recruit talents.

The current unemployment rate in the United States is 4.6%. Fed officials believe that although the number of laborers is 3 million less than before the epidemic, with the increase in the number of retirements in the past two years, the labor gap may not be able to make up all of it.

Business people said that other reasons for the tight labor market include: continuing concerns about the epidemic, child care issues, government subsidies and accumulated savings. These factors reduce the willingness and urgency of people to return to the job market.

Regional reports
  • The Federal Bank of New York said that as economic activity rebounded, the mortgage delinquency rate (delinquency rate) has improved, and the demand for loans from commercial customers has increased.
  • Cleveland Union Bank mentioned that although most companies believe that the demand for goods and services is stable, some companies said that continued supply interruptions and rising related costs have caused some customers to delay consumption until product supply improves or costs drop.
  • The Atlanta Federal Bank stated that non-labor costs have generally risen and corporate pricing power has improved.


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