Fed's Beige Book: Most districts noted sudden drop in leisure & hospitality spending as Omicron cases rose
|According to the Fed's Beige Book, a report on current economic conditions in each of the 12 Federal districts, most districts noted a sudden pullback in leisure and travel spending, as well as hotel occupancy and patronage at restaurants as the number of Covid-19 Omicron infections rose.
Additional Takeaways:
Growth...
"Contacts from many districts indicated growth continued to be constrained by ongoing supply chain disruptions and labor shortages."
"Economic activity across the United States expanded at a modest pace in the final weeks of 2021."
"The manufacturing sector continued to expand nationally, with some regional differences in the pace of growth."
"Although optimism remained high generally, several districts cited reports from businesses that expectations for growth over the next several months cooled somewhat during the last few weeks."
Labour market...
"Despite the modest pace of growth, demand for materials and inputs, and demand for workers, remained elevated among businesses."
"Employment grew modestly in recent weeks, but contacts from most districts reported that demand for additional workers remains strong."
"Job openings were up but overall payroll growth was constrained by persistent labor shortages."
"Ongoing labor shortages and associated wage growth also added cost pressures to businesses."
"Tightness in labor markets drove robust wage growth nationwide, with some districts highlighting additional growth in labor costs associated with non-wage benefits."
"Many contacts noted that wage gains among low-skill workers were particularly strong."
"Compensation growth remained well above historical averages across industries, across worker demographics, and across geographies."
Consumer health...
"Consumer spending continued to grow at a steady pace ahead of the rapid spread of the Omicron Covid-19 variant."
Inflation, supply chains...
"Contacts from most federal reserve districts reported solid growth in prices charged to customers, but some also noted that price increases had decelerated a bit from the robust pace experienced in recent months."
"Wholesale and materials prices contributed to pricing pressures across a wide range of industries, spanning service providers and goods producers."
"Many contacts attributed the high cost of inputs to ongoing supply chain disruptions."
"Some districts reported that transportation bottlenecks had stabilized in recent weeks, though procurement costs remained elevated."
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