Fed survey finds economy facing supply chain, other drags

WASHINGTON — The Federal Reserve reports that the economy faced a number of headwinds at the start of this month, ranging from supply chain disruptions and labor shortages to uncertainty about the delta variant of COVID.

In its latest survey of business conditions around the nation, the Fed said Wednesday that a majority of its 12 regions viewed consumer spending, the main driving force for the economy, as remaining positive despite the various speed bumps.

The report noted wide differences in performance, however, with auto sales suffering because of constrained inventories due to supply-side problems while manufacturing was growing either moderately or robustly depending on which Fed district was reporting.

“Outlook for near-term economic activity remained positive, overall, but some districts noted increased uncertainty and more cautious optimism than in previous months,” the Fed said in the report on business conditions nationwide, known as the beige book.

The report, based on surveys of business contacts by the Fed's 12 regional banks, will form the basis for discussion when central bank officials next meet on Nov. 2-3. The Fed is widely expected to announce at that meeting that it will begin to reduce, or taper, its $120 billion in monthly bond purchases starting either in November or December.

Those purchases have been designed to give the economy an extra boost by holding down long-term interest rates.

A move to trim the purchases is expected to be followed in the second half of next year with the first rate hikes. The Fed's benchmark interest rate has been an at ultra-low zero to 0.25% since the COVID pandemic struck with force in the spring of 2020.

Agencies via Xinhua