10/20/2021 | Press release | Distributed by Public on 10/20/2021 19:49
By SBE Council at 20 October, 2021, 9:47 pm
by Raymond J. Keating -
The latest Beige Book from the Federal Reserve - an assessment of the economy based on interviews with business contacts, economists, market experts, and others - pointed to economic growth slowing.
Specifically, the Beige Book pointed to economic activity growing at a "modest to moderate" pace, but "that the pace of growth slowed this period, constrained by supply chain disruptions, labor shortages, and uncertainty around the Delta variant of COVID-19."
Industry-specific points were all over the map, with travel and tourism varying widely across parts of the country; manufacturing, trucking and freight up "moderately to robustly"; non-manufacturing growth ranging from slight to moderate; and residential real estate "unchanged or slowed slightly."
The employment picture was summed up, "Employment increased at a modest to moderate rate in recent weeks, as demand for workers was high, but labor growth was dampened by a low supply of workers."
As for inflation, the picture painted by the Beige Book is concerning, to say the least:
"Most Districts reported significantly elevated prices, fueled by rising demand for goods and raw materials. Reports of input cost increases were widespread across industry sectors, driven by product scarcity resulting from supply chain bottlenecks. Price pressures also arose from increased transportation and labor constraints as well as commodity shortages. Prices of steel, electronic components, and freight costs rose markedly this period. Many firms raised selling prices indicating a greater ability to pass along cost increases to customers amid strong demand."
Looking ahead, the Fed reported: "Outlooks for near-term economic activity remained positive, overall, but some Districts noted increased uncertainty and more cautious optimism than in previous months."
That included a wide array of views on prices, from those seeing continued considerable price increases to those expecting moderating price increases over the coming 12 months.
In the end, the effort to emerge from a pandemic economy and related shutdowns was going to be hard and uneven. But on top of these challenges, we see policymakers actively working to make matters even worse, via proposed tax increases and regulatory burdens; more government spending; maintaining protectionist trade policies; and historically loose monetary policy courtesy of the Fed.
Policies of this nature will only fuel and worsen current business challenges and uncertain economic conditions.
Raymond J. Keating is chief economist for the Small Business & Entrepreneurship Council.