The Federal Reserve reported the issues Wednesday. Although a survey of business conditions across the nation from the Fed’s 12 regional banks found that the economy is growing at a modest-to-moderate speed and there is a positive outlook for future growth, companies were concerned when the problems would be resolved, The Associated Press reported.
“There were wide-ranging input cost increases stemming from strong demand for raw materials, logistical challenges and labor market tightness,” said the Fed’s report, referred to as the beige book.
The report said companies talked about “persistent difficulty in hiring and retaining employees.” A number of leisure and hospitality firms are working limited hours because of staff shortages.
Businesses heard a plethora of reasons for the shortage, including no childcare, retirements, and concerns regarding COVID, according to the report.
“Nearly all districts reported robust wage growth,” the Fed said. “Hiring struggles and elevated turnover rates led businesses to raise wages and offer other incentives, such as bonuses and more flexible working arrangements.”
Central bank officials are scheduled to hold their final meeting of the year on Dec. 14-15. The discussion will revolve around the Fed survey, which used interviews with business contacts in the Fed’s 12 regional bank districts.
Federal Reserve Chairman Jerome Powell also said the central bank is ready to pull back easy-money policies the reserve used to aid the economy over the past 20 months.
For more reporting from the Associated Press, see below.
The Fed had been buying $120 billion in Treasury bonds and mortgage-backed securities since the spring of 2020. At its meeting last month, the central bank announced that it would start to trim those purchases, which serve to keep long-term interest rates low, by $15 billion in November and another $15 billion in December.
Powell’s comments this week indicated the Fed may announce at its December meeting that it will make larger monthly reductions in the future so that the bond purchases can be totally ended earlier than the June end-date which had been expected.
That would clear the way for the Fed to begin raising its benchmark interest rate, which was reduced to a record low of 0 percent to 0.25 percent in early 2020.
Both the ending of the bond purchases and the start of interest rate hikes would be expected to raise borrowing costs for consumers and businesses as a way to slow the economy and fight inflationary pressures.
Powell made his comments as inflation has surged to a three-decade high, largely because the pandemic has limited supplies at a time when the re-opening of the economy has led to high demand.
Powell’s comments this week indicated the Fed may announce at its December meeting that it will make larger monthly reductions in the future so that the bond purchases can be totally ended earlier than the June end-date which had been expected.
That would clear the way for the Fed to begin raising its benchmark interest rate, which was reduced to a record low of 0 percent to 0.25 percent in early 2020.
Both the ending of the bond purchases and the start of interest rate hikes would be expected to raise borrowing costs for consumers and businesses as a way to slow the economy and fight inflationary pressures.
