Beige Book: Economic Outlook Grows More Uncertain

Economic activity continued to expand at a modest to moderate pace through February 2022, amid reported COVID-19 disruptions and severe winter weather, according to the Federal Reserve’s second Beige Book release of the year. Looking ahead to the next six months, the Fed noted that the outlook remained “stable and generally optimistic,” but that “reports highlighted an elevated degree of uncertainty.”

Consumer spending was down from the prior report and reports on auto sales were mixed. Meanwhile, all districts reporting that supply chain issues and low inventories held back growth. From a financial perspective, banks reported some weakening in financial conditions, though loan demand was generally unchanged.

Employment increased at a modest to moderate pace and the worker shortage persisted, though there were some signs of an improving labor supply. Prices also continued to rise, and firms said they expect additional price increases in the coming months.