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The Fed: U.S. grew slightly in May, Fed’s Beige Book finds — so did worries about recession


The U.S. economy showed “slight or modest” growth through late May, a Federal Reserve survey found, but labor and supplies were still in short supply and rapid inflation remained a big problem.

“Contacts tended to cite labor market difficulties as their greatest challenge, followed by supply chain disruptions” the Fed’s regular survey of the economy known as the Beige Book reported.

“Rising interest rates, general inflation, the Russian invasion of Ukraine, and disruptions from covid-19 cases (especially in the Northeast) round out the key concerns impacting household and business plans.”

The central bank has raised a key short-term U.S. interest rate twice this year twice this year to try to squelch the worst outbreak of inflation in 40 years.

After keeping its benchmark rate near zero during the pandemic, the Fed is primed to lift it to 2.5% or even high by year end.

At the same time, though, the Fed doesn’t want to raise rates too aggressively and spawn a sharp economic slowdown or even recession.

Read: Exclusive: Fed’s Bostic cautions against interpreting prospective pause in rate hikes as a ‘Fed put’

Here are the highlights from the report:


Most of the Fed’s regional banks reported “strong or robust price increases,” especially for supplies businesses need to produce their goods and services.

Several districts said inflation had slowed a bit, however, and others said customers were starting to resist price hikes. Some customers cut back on purchases or sought out cheaper alternatives


A majority of Fed regional banks “reported slight or moderate growth” in the past month. But one-third said growth had slowed.

Higher interest rates dented home sales and high prices spurred consumers to spend less on retail goods.


Businesses continued to hire, the Fed said, and every region said labor was tight. Some companies said they could not produce enough goods and services to meet customer demand because of a labor shortages.

Yet some businesses on the East and West coasts said they put hiring freezes in place and others said the big wage increases over the past year were beginning to level off.

The labor shortage has pushed companies to adopt more automation, offer flexibility such as working from home and boost pay. Wages have risen in the past year at the fastest pace since the early 1980s.


Fed officials say they can slow inflation without tilting the economy into recession, but it’s never succeeded when inflation has been as high as it is now.

Business contacts in three Fed regional districts, including Boston and Philadelphia, expressed “concerns” about a recession. That’s up from zero in April.

“Rising prices and recession fears have turned consumers and firms more cautious,” the Philadelphia Fed said.

“While many contacts remained optimistic, an increasing number expected a recession by year’s end,” the Boston Fed said.

Market Snapshot: U.S. stocks slide to begin June, but trade off session lows

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