The economy grew at modest pace as a growing number of districts saw a decline in job growth and a rise in inflation boosted by increasing input costs, according to the Fed’s Beige Book released Wednesday.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through Jan. 4, showed the U.S. economy and inflation expanded at a modest pace, though the pace of employment slowed in most districts.
“Economic activity increased modestly since the previous Beige Book period … and almost all districts saw modest price increases,” the report said. While a “growing number of districts reported a drop in employment levels relative to the previous reporting period.”
The somewhat gloomier backdrop for the labor market comes as the surge in the virus continues to dent near-term business optimism despite the vaccine roll out. “Although the prospect of COVID-19 vaccines has bolstered business optimism for 2021 growth, this has been tempered by concern over the recent virus resurgence and the implications for near-term business conditions,” according to the report.
Subdued business optimism and weaker job growth appears to be making a dent in consumer spending, though online commerce continues to enjoy healthy demand.
“Some Districts noted declines in retail sales and demand for leisure and hospitality services, largely owing to the recent surge in COVID-19 cases and stricter containment measures … Most Districts reported an intensification of the ongoing shift from in-person shopping to online sales during the holiday season. “