Investing.com – The U.S. economy continued to expand at a moderate pace, but concerns about trade tariffs and tight labor markets "constrained" growth, according to the Fed's Beige Book released Wednesday.
The central bank’s Beige Book economic report, based on anecdotal information collected by the Fed’s 12 reserve banks through July 9, showed the U.S. economy and inflation expanded at a modest pace, but manufacturers in all districts reported concerns over tariffs and tight labor markets.
"Manufacturers in all Districts expressed concern about tariffs and in many Districts reported higher prices and supply disruptions that they attributed to the new trade policies," according to the Fed’s beige book. "All Districts reported that labor markets were tight and many said that the inability to find workers constrained growth."
Concerns over trade tensions come as Federal Reserve Chairman Jay Powell warned Wednesday that protectionism policies could hurt the U.S. economy.
"The bottom line is that a more protectionist economy is an economy that is less competitive, less productive. We know that. It is not a good thing if this is where it goes," Powell said in testimony before the House Financial Services Committee Wednesday.
The pace of inflation was supported by "strong" increases in price pressures across key inputs, while wages growth continued to at a "modest to moderate" pace, according to the Fed's Beige Book.
"The prices of key inputs rose further, including fuel, construction materials, freight, and metals; a few Districts described these input price pressures as elevated or strong."