WASHINGTON • The Federal Reserve is seeing both labour and material shortages mounting up across several sectors of the US economy, which may see consumers paying even more for everything from fuel to new homes.
In the Fed's Beige Book report released on Wednesday, the central bank references "shortage" or "shortages" 37 times, up six mentions from a previous decade-high total last month. That is also 12 times more than the figure in the same period last year, during the early days of the pandemic.
Shortages have been a persistent economic theme since the early days of the outbreak, when store shelves were completely emptied of lockdown necessities such as toilet paper, hand sanitiser and personal protective equipment.
More than a year after the pandemic's onset, scarcity concerns are primarily focused on global supply-chain issues and strengthening demand in the rebounding economy.
The regional banks in Dallas, Philadelphia and San Francisco all noted that the week-long Suez Canal blockage contributed to the shortages. The regional overviews mentioned shortages related to microchips and semiconductors nine times, the same total as last month's reading, but up from zero references in the January report.
Despite the supply-chain bottlenecks around the essential tech component, car sales broadly grew and manufacturing activity also expanded, with more than half of the banks' districts reporting robust growth in the sector.
The semiconductor dearth constrained auto inventories, the Fed said. The auto industry has struggled to source chips as semiconductor manufacturers have allocated more capacity to consumer products after the pandemic prompted a surge in orders for smartphones, TVs and computers.
Hiring remained a widespread challenge, particularly for low-wage and hourly workers, putting downward pressure on job growth.
But some firms said absenteeism related to the virus was down and employment expectations were generally bullish. Wage growth accelerated slightly across the board, notably in manufacturing and construction, where labour shortages have been particularly challenging.
Outside of labour constraints, increasing input costs also put upward pressure on prices, particularly for raw materials like metals, lumber, food and fuel, the Fed said.
Nationally, cost increases were partly attributed to ongoing supply-chain disruptions and exacerbated by severe winter weather events, particularly in the manufacturing, construction, retail and transport sectors.
So far, businesses are mostly bearing the brunt of rising costs.
"There were widespread reports of increased selling prices also, but typically not on pace with rising costs," the report said. "Contacts generally expect continued price increases in the near term."
BLOOMBERG
