Lindsay (NYSE: ) Dunsmuir & Ann Saphir

(Reuters) – While the U.S. economic growth was modest to moderate in October, the Federal Reserve survey showed that firms struggled with rising inflation as well as a scramble for jobs amid shortages of labor.

The price of raw materials rose at a steady to strong pace. Price hikes were common across all economic sectors. In its most recent “Beige Book”, the U.S. central banking reported that there were broad-ranging increases in input costs due to strong demand for raw material, logistical problems, and tight labor markets. This report is based on anecdotal evidence from businesses across the country.

Fed officials have already taken steps to reduce inflation due to persistently high levels.

Jerome Powell, Fed chair, stated Tuesday to the U.S. Senate Banking Committee, “The central bank may accelerate the end of their bond-buying programme a few months sooner than expected due to an increasing price pressure, strong job gains, and acceleration in economic growth that has not been matched with an increase of labor supply.”

Fed reduced its purchase of Treasuries as well as mortgage-backed Securities earlier this month. The program was designed to support the economy during the COVID-19 pandemic. Fed plans to reduce the $120 Billion monthly program to the end of June.

Fed policymakers are expected to consider a more rapid timeline during their Dec. 14-15 meeting. The central bank is trying to limit its monetary stimulus, and set the stage in the future for interest rate increases next year.

As inflation continues to rise at twice the Fed’s target flexible rate of 2% an annual, Powell testified in the Senate that it was not likely to fall until the second quarter of next year.

INCENTIVES FOR WORKERS

The Fed reported in 12 of its districts that there were difficulties for businesses to fill job openings. This resulted in a rise on salaries.

Nearly every Fed district reported strong wage growth. According to the report, “Hiring problems and higher turnover rates led businesses offer additional incentives like bonuses and flexible working arrangements”

Current unemployment in America is 4.6%. Policymakers are increasingly convinced that although 3 million more people work in the US than prior to the COVID-19 pandemics, this will not be all the result of an increase in retirements in recent years.

The rate of wage inflation has not slowed down, as employers across all industries are trying to attract workers who have quit at an unprecedented level. Workers who are confident that they can find work elsewhere will leave with a high quit rate.

Other reports indicated that consumers spent modestly more and the outlook for overall activity was still positive across most of the districts. Some expressed concerns about uncertainty regarding when labor and supply shortages might ease.