The Federal Reserve indicated that the US economic expansion has accelerated to some extent compared to earlier periods, with business contacts remaining optimistic. Labor demand remains strong but supply is constrained, and supply chain challenges in manufacturing and construction may disrupt production. Regional business contacts expect to face issues of rising costs and charging customers higher prices in the coming months.
On June 2, the Federal Reserve released its regional economic survey report, commonly known as the 'Beige Book,' maintaining the description of overall US economic activity as 'moderate recovery,' with growth slightly higher than the previous reporting period. In April, the Beige Book upgraded its assessment from 'slight recovery' to 'moderate recovery.'
The Beige Book mentioned that during the reporting period from early April to late May, some regional contacts within the Federal Reserve’s 12 districts noted the positive impact of increased vaccination rates and relaxed social distancing measures on the economy, while also pointing out the adverse effects of supply chain disruptions.
Among these, the increase in vaccination rates most significantly boosted consumer spending, particularly in leisure travel and restaurant expenditures. Light vehicle sales remained robust but were constrained by tight inventories. Demand for transportation services, including ports, was 'exceptionally strong.'
Both manufacturers and builders mentioned that significant supply chain challenges continue to disrupt factory production, mainly due to widespread shortages of raw materials and labor, as well as delivery delays. Homebuilders noted that supply chain challenges have driven up costs, and strong demand exceeding construction capacity has limited sales.
Regarding investors' most concerning 'price' evaluation, the Federal Reserve's Beige Book acknowledged, 'Since the last...