Fed’s Beige Book sees pickup in U.S. economic growth

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The outlook: The U.S. economy grew at a faster rate in April and May than earlier in the year, according to the Federal Reserve’s latest Beige Book report released Wednesday. The economy expanded overall at a “moderate pace,” the report found.

What happened: Consumer spending picked up as a result of increased coronavirus vaccination rates. Manufacturing activity increased despite notable supply chain challenges. Inflation pressures continued to build as both input and selling prices moved higher.

Firms were adding to staff at a steady pace. Some companies reported it was difficult to find low-wage hourly workers. In some cases, this led some businesses to reduce their hours of operation.

There were reports of record traffic at East Coast ports.

Big picture: The economy appears to be on an upward growth trajectory but perhaps not at the “boom” level that many economists talk about. Still, Americans are taking advantage of their newfound freedom to eat out and travel.

Job market: There were widespread reports of labor shortages. In St. Louis, a job fair held by a dozen restaurants to find 100 workers drew barely a dozen applicants. However, companies appeared reluctant to raise pay packages. The Minneapolis Fed reporter that wage growth remained below 3% on an annualized basis. Firms in Atlanta thought that labor shortages would abate this fall. A manufacturing firm in the Boston region had an ambitious goal of hiring 10,000 workers.

Market reaction: The Dow Jones Industrial Average
DJIA,
+0.08%
was little changed in late afternoon trading as investors awaited Friday’s key employment report for May.



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