The US economy saw "moderate to robust growth" in recent weeks as it bounced back from the Covid-19 pandemic despite rising prices and shortages of supplies, a Federal Reserve report said Wednesday.
Some of the fastest growth was seen in sectors like travel, tourism and transportation, which were hit hard during the pandemic, as well as manufacturing and nonfinancial services, the Fed's Beige Book survey of economic conditions said.
However "supply-side disruptions became more widespread," the report said, citing shortages of goods, low inventories of consumer goods and delays in delivery.
Prices meanwhile rose at an "above-average pace," with seven of 12 Federal Reserve districts reporting "strong price growth" and the rest more subdued increases, according to the survey encompassing the period from late May to early July.
The report was prepared ahead of the July 27-28 meeting of the central bank's policy setting Federal Open Market Committee, where inflation hawks could argue the rising prices mean the Fed should ease up on stimulative polices enacted last year during the pandemic.
Hardest hit by the price increases was the leisure and hospitality sector, the survey said, as hotels and restaurants saw renewed demand thanks to Covid-19 vaccines after struggling with business closures to stop the virus through much of 2020.
Construction prices were high while container prices were at "very high levels" as supply chains worldwide struggled with renewed surges in consumer demand, according to the report.
Even with the challenges, many Fed districts reported increasing business activity, including Minneapolis, where "the district economy saw strong growth despite challenges of inventory shortages, higher prices, and labor needs."
However some districts said progress was still a ways off.
"Business activity continued at a moderate pace of growth" but was "still below levels attained prior to the pandemic," according to the Philadelphia Fed.
"More widespread vaccinations have led to a faster resumption of normal activity which has exacerbated labor shortages and wage pressures for low-wage jobs."