Economic growth expanded at a “slight to modest” pace and employment remained slow across large parts of the U.S. at a time when businesses face rising costs to curb the Covid-19 spread, a Federal Reserve survey showed.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through the end of the year, noted most districts continued to see an increase in economic activity, with the “pace of growth characterized as slight to modest,” while employment increased in almost all districts, though “growth remained slow.”
Inflation, meanwhile, showed no sign of breaking its lull even as food and auto prices jumped.
“Overall, consumer prices across Districts rose modestly, with the notable exceptions of food, automobiles, and appliances, which increased significantly. Retail gasoline prices declined. Input costs increased at varying degrees, mostly led by increases in materials costs, particularly steel and lumber,” according to the report.
The impact of the pandemic, meanwhile, continued to show up in costs as businesses initiated measures to prevent the spread of Covid-19.
“Multiple Districts reported continued additional costs for firms due to COVID-19, including personal protective equipment, sanitation equipment, testing equipment, and technology needed for remote work. Changes in row crop prices were mixed, while Districts reported declines in prices for animal proteins.”
The subdued note on inflation comes as the Federal Reserve recently adopted a new policy measure on inflation that would see consumer prices run above the 2% target for a period of time to make up for sluggish growth.