Fed Sees Economy Advancing Amid ‘Widespread Labor Tightness’

The U.S. economy picked up steam with only modest inflation from September through early October, as some companies expected a tight labor market would exacerbate hurricane rebuilding efforts, a Federal Reserve survey showed.

The central bank’s Beige Book economic report, based on anecdotal information collected by the 12 regional Fed banks through Oct. 6, said economic activity increased even amid “major disruptions” across the South from hurricanes Harvey and Irma. Still, price pressures were described as “modest.”

“Labor markets were widely described as tight” and worker shortages in certain sectors “were also restraining business growth,” the report released Wednesday in Washington showed. “Despite widespread labor tightness, the majority of districts reported only modest to moderate wage pressures.”

Wage pressures were starting to build in some industries, including transportation and construction, the report said.

Such strong demand for workers was beginning to push some employers to add incentives to entice new hires and keep existing staff. “Growing use of sign-on bonuses, overtime, and other non-wage efforts to attract and retain workers were also reported,” the Fed said. Read more…

Fed Sees Economy Advancing Amid ‘Widespread Labor Tightness’