The US economy “fell slightly” in August -Bed Beige Book

WASHINGTON, Sept. 8 (Reuters) – The U.S. economy “slowed slightly” in August as the renewed rise in coronavirus affected restaurants, travel and tourism, the Federal Reserve said on Wednesday. but the economy remained globally in the midst of a post-pandemic rush of rising prices, labor shortages and reduced hiring.

“The slowdown in economic activity was largely attributed to a decline in restaurants, travel and tourism in most districts, reflecting safety concerns due to the increase in the Delta variant and, in some cases, of international travel restrictions, ”the Fed reported. published in his latest compendium Beige Book of anecdotal information on economics.

However, the document, which summarizes the information gathered until August 30, which will be part of the deliberations of the Fed’s September 21-22 political meeting, reported strong labor demand and hiring. more difficult due to “increased turnover, early retirements, childcare needs, challenges in negotiating job offers and improved unemployment benefits. Some districts noted that return to work schedules were pushed due to of the increase of the Delta variant “.

Job openings were so plentiful, the Atlanta Fed noted, that restaurants were besieged by a “ghostly coastline,” where employees take jobs for a few days and then leave without warning and move on to the next restaurant.

Prices, Fed officials reported, continued to rise.

“Inflation was reported to be stable at a high rate,” and Fed districts said they were moderate or strong, and the costs of metals, commodities, building materials and other industrial commodities were rising in most districts.

“With widespread resource scarcity, pressures on ticket prices continued to be widespread,” the Fed reported, causing headaches in industries as diverse as brewing and wedding making.

“One contact reported the return of several bridal parties because the dresses did not arrive in time for weddings,” the Richmond Fed reported. In the Fed district of St. Louis, “a regional brewery reported that its supplier doubled prices between ordering and delivering an aluminum pallet.”

The report describes a difficult outlook for the U.S. economy and the Fed toward a fall season, when the pandemic recovery was expected to take a clearer form.

The risks of sustained price increases remain real, rather than fading as quickly as Fed officials expected.

On the other hand, “all districts continued to report increased employment overall,” possibly alleviating concerns that weak employment growth of only 235,000 new positions in August was on the verge of a wider slowdown in employment, given the spread of the Delta coronavirus variant. Analysts had expected more than 700,000 new jobs last month.

WAIT FOR MORE CLARITY IN WORK

Fed officials are considering cutting $ 120 billion in monthly bond purchases as a first step in an upcoming shift toward post-pandemic monetary policy, and while this year’s decision is likely , reading the August post may require additional confirmation that recruitment will be maintained. on the track.

“The Delta variant is weighing on consumer spending and jobs, and the pace of growth appears to be slowing,” New York Fed Chairman John Williams said Wednesday.

“He’ll want to see more improvements” in the job market before deciding the economy is ready for the Fed to cut one of its pandemic programs, Williams said.

“It might be appropriate to start slowing the pace of asset purchases this year,” Williams said, but concluded that “it is clear that the pandemic is far from over, both in terms of its health effects and to its effects on the economy “.

New data released on Wednesday showed the strength that had been accumulating in the labor market over the summer, with a record 10.9 million jobs in July. This overshadowed the number of unemployed people and left some officials convinced that hiring will remain strong and allow the Fed to begin its “reduction” in bonds soon. Read more

“There is a lot of demand for workers and there are more job opportunities than there are unemployed,” St. Louis Federal Reserve Chairman James Bullard said in an interview published Tuesday in the Financial Times.

Reports from Fed districts indicated that the August slowdown in job creation could have been more motivated by problems matching workers with jobs they would accept instead of slowing demand for new employees.

“Employment grew strongly, but hiring demand continued to outpace the labor response by a wide margin,” the Minneapolis Fed reported. “Workforce development professionals in Montana also highlighted the affordability of housing and child care as major challenges facing job seekers. The exposure to COVID-19 went continue to be a major concern among workers and job seekers. “

Although the consumer and business services sector “deteriorated somewhat,” the San Francisco Fed reported, “labor shortages have severely reduced capacity in some hotels, airlines and restaurants. , and a Mountain West hotel has to close several floors due to a lack of cleaning staff. “

Reports by Howard Schneider and Ann Saphir; Additional reports by Lindsay Dunsmuir; Edited by Andrea Ricci

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