Fed says supply snags hurting US growth but may be easing

Fed says supply snags hurting US growth but may be easing

Fed says supply snags hurting US growth but may be easing

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WASHINGTON: The US economy continues to struggle with the supply issues that have pushed the prices higher in recent weeks, but there are signs the strains may be easing, the Federal Reserve said on Wednesday.

Businesses in several areas of the country noted that “despite strong demand, growth was constrained by supply chain disruptions and labour shortages,” according to the Fed’s “beige book” survey of economic conditions.

However, the report said the “outlook for overall activity remained positive in most districts,” although some noted “uncertainty about when supply chain and labour supply challenges would ease.”

Rising inflation is a top issue for the US central bank, and Fed Chair Jerome Powell made a dramatic shift on Tuesday, saying he now sees a risk the price increases could continue for some time.

Powell said he supports a faster pullback of the Fed’s stimulus policies, a move that would open the door to raising lending rates sooner than expected.


Strong pent-up demand from American consumers, as the US economy reopened from the pandemic shutdowns has posed a challenge to the companies that have been struggling to get products and materials from foreign suppliers, which in many cases continue to face restrictions.

The auto industry was hard hit by a global shortage of important computer chips, but shipping bottlenecks have been felt throughout the economy.

Read more: US economy grows 2% in third quarter as consumer spending slowed

The Fed survey noted “moderate to robust” price increases, “With price hikes widespread across sectors of the economy”.

However, the survey noted that “wider availability of some inputs, notably semiconductors and certain steel products, led to easing of some price pressures”.

Strong demand means the firms have been able to raise prices with “little pushback”, the Fed said.


Companies are continuing to try to add workers to their payrolls but face “persistent difficulty in hiring and retaining employees”.

The report was prepared in advance of the meeting later this month of the Fed’s monetary policy committee, which economists now expect will decide to reduce the pace of monthly bond purchases more quickly.

Read more: US economy adds 531,000 jobs in October

Once the bond buying ends, the central bank would be in a position to raise the benchmark interest rate, which it slashed to zero at the start of the pandemic.

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