Beige Book: Economic Activity Expands; Labor Demand Strong

U.S. Federal Reserve (01/12/22)

Economic activity across the U.S. expanded at a modest pace in the final weeks of 2021. Contacts from many Districts indicated growth continued to be constrained by ongoing supply chain disruptions and labor shortages. Although optimism remained high generally, several Districts cited reports from businesses that expectations for growth over the next several months cooled somewhat during the last few weeks.

Employment grew modestly in recent weeks, but contacts from most Districts reported that demand for additional workers remains strong. Job openings were up, but overall payroll growth was constrained by persistent labor shortages. Tightness in labor markets drove robust wage growth nationwide, with some Districts highlighting additional growth in labor costs associated with nonwage benefits. While many contacts noted that wage gains among low-skill workers were particularly strong, compensation growth remained well above historical averages across industries, worker demographics, and geographies. Besides wage gains, many contacts indicated adjustments to job demands—such as accommodating part-time work or adjusting qualification requirements—to attract more applicants and retain existing workforces.

See the full report here.