US Has A Labor Shortage Problem Despite Stubborn Unemployment - Fed Beige Book

Faizan Hashmi Published July 15, 2021 | 12:20 AM

WASHINGTON (UrduPoint News / Sputnik - 15th July, 2021) Scarcity of labor supply remains a problem for the US economy, with employers continuously citing a shortage of workers despite stubborn unemployment, the Federal Reserve said in its monthly Beige Book report on Wednesday that chronicles activity in the country's 12 banking districts.

"Labor shortages were often cited as a reason firms could not staff at desired levels, with firms in three districts delaying expansion or scaling back services due to understaffing," the report said.�

The dearth of labor supply doesn't appear to be waning anytime soon, with firms in several districts expecting "the difficulty finding workers to extend into the early fall," the Fed added.

The update came as Fed Chair Jerome Powell continued to suggest there was still a long way for the economy to achieve "substantial further progress" on maximum unemployment, and downplayed inflation fears.

The inflation numbers "have been higher than expected and hoped for, but they're actually still consistent with what we've been talking about," Powell said in his semi-annual testimony before the House Financial Services Committee on Wednesday.

"It's just the perfect storm of high demand and low supply, and it should pass."

The United States lost more than 21 million jobs between March and April 2020, at the height of business lockdowns forced by the coronavirus. About 8 million of those jobs have not returned, officials say.

The US economy itself shrank by 3.5 percent in 2020 due to lockdowns imposed by the COVID-19. Since the start of this year, growth has exceeded expectations, with a first-quarter expansion of 6.4 percent.

The Fed has forecast a 6.5 percent economic growth for all of 2021 although Powell has said he did not expect "full employment" � defined by a monthly unemployment rate of 4.0 percent or lower � to occur anytime soon. The monthly unemployment rate stood at 5.9 percent in June, a notch higher than May's 5.8 percent.