Skip to main content

Fed Chair Says Inflation To Hang Around a Bit Longer; New Beige Book Data Show Why

WASHINGTON–The chairman of the Federal Reserve told the House the current increase in inflation is temporary, although it will remain elevated in the months ahead before moderating.

Fed Chairman Jay Powell’s comments before Congress came on the same day the Fed released its Beige Book analysis, which found an economy showing increasing strength, but also suffering shortages of many materials and manpower.

During his testimony before House Financial Services Committee as part of his semiannual monetary policy report to Congress, which he will repeat today before the Senate, Powell said asset valuations have generally risen as the economy has improved and investor risk appetite has grown.

“Household balance sheets are, on average, quite strong, business leverage has been declining from high levels, and the institutions at the core of the financial system remain resilient,” Powell said.

What About Inflation?

As for inflation, which is of concern to many Americans who have faced rapidly rising prices, Powell agreed it has “increased notably” and will likely remain elevated in the months ahead before moderating.

“Inflation is being temporarily boosted by base effects, as the sharp pandemic-related price declines from last spring drop out of the 12-month calculation,” Powell testified. “In addition, strong demand in sectors where production bottlenecks or other supply constraints have limited production has led to especially rapid price increases for some goods and services, which should partially reverse as the effects of the bottlenecks unwind. Prices for services that were hard hit by the pandemic have also jumped in recent months as demand for these services has surged with the reopening of the economy.”

Powell further said the Federal Open Market Committee (FOMC) is seeking longer-term inflation expectations that are “well anchored at 2%” to avoid long periods of low or high inflation. 

“Measures of longer-term inflation expectations have moved up from their pandemic lows and are in a range that is broadly consistent with the FOMC’s longer-run inflation goal,” he said.

Powell offered no forecast directly related to the future direction of rates.

Beige Book Data

Meanwhile, the Fed’s newest Beige book data indicate what most everyone recognizes, which is the U.S. economy is recovering quickly, but the recovery is being restrained by widespread shortages of labor and supplies.

While the economy has made lots of progress, Powell indicated during his testimony that it stills needs a lot of support from the Fed. As evidence, he  pointed to the millions of people still being out of work.

“The U.S. economy strengthened further from late May to early July, displaying moderate to robust growth,” the Beige Book said. 

The biggest problem for the economy right now is the inability of businesses to keep up with the crush of demand, according to the Beige Book analysis. “Supply-side disruptions became more widespread, including shortages of materials and labor, delivery delays, and low inventories of many consumer goods,” the survey said.

The Beige Book pointed to strong demand for a variety of goods and services, including new and used cars, travel and tourism. Most industries were also growing rapidly.

The July Beige Book covered the period from late May to July 2. 

Unlikely to Ease Off Throttle

“The Beige Book mirrored Chairman Powell’s comments before Congress of a growing belief that inflationary pressures may last longer than once believed,” said NAFCU’s chief economist and VP of research, Curt Long. “Ongoing shortages in labor and materials are frustrating hopes that the economy would quickly return to normal. However, with the labor market still far from full employment, the Fed is unlikely to ease off the throttle.”

 

Comments

Popular posts from this blog

NCOFCU Newsletter

The Bucket Coach is a financial advice book designed by Fire Services Credit Union, Tronto, Canada. and written exclusively for Fire Fighters It's a practical guide for household financial management, including investments, credit and mortgages, and retirement. Developed with contributions from Fire Fighters," NCOFCU Newsletter : " Kevin Connolly Chief Executive Officer    Fire Services Credit Union Phone: 416-440-1294 ext 301  Toll Free: 1-866-833-3285 E-mail:  kevin@firecreditunion.ca 1997 Avenue Rd Toronto, ON M5M 4A3 

Government Shutdown? Credit Unions Know The Drill.

  With three complete government shutdowns and repeated trips to the precipice in the past 25 years, credit unions have had plenty of opportunity to refine how they approach helping members during work stoppages. Read the complete article HERE __ ______________________________________________ Check out NCOFCU's additional features: First Responder Credit Union Academy Podcasts YouTube Mini's Blog Job Board

AI Meets Retail: Walmart Lets Shoppers Buy Directly Through ChatGPT Using Sparky Instant Checkout

  10/15/2025 07:10 pm         BENTONVILLE, Ark.— Walmart is teaming up with OpenAI to introduce Sparky AI-driven shopping experiences that let customers and Sam’s Club members complete purchases directly through ChatGPT using its new Instant Checkout feature, PYMNTS reported. The collaboration broadens Walmart’s use of artificial intelligence across its retail ecosystem and underscores a wider industry move toward conversational, predictive commerce. Through the integration, shoppers can plan meals, restock household essentials, or discover new products simply by chatting with ChatGPT—while Walmart manages the entire transaction process seamlessly in the background, PYMNTS explained. “For many years now, eCommerce shopping experiences have consisted of a search bar and a long list of item responses,” Doug McMillon, president and CEO of Walmart Inc., stated in the PYMNTS report. “That is about to change. There is a native AI experience coming that is multi-media...
Updated 2012 NAFCU Credit Union Compliance GPS is Now Available! Written by Steve Van Beek Shameless Plug Alert ! We are very pleased to announce the availability of the Updated 2012 NAFCU Credit Union Compliance GPS . Over the course of the last year, there have been many small tweaks and changes that have made life difficult for credit unions and, specifically, compliance officers (and many others as well). These included technical changes to regulations as well as substantive changes to regulations and regulators . ****READ MORE;  

Sunday Reading - An explainer on the Cold War

  Global Tensions     An explainer on the Cold War The Cold War was a global competition ( watch animated map ) for power and influence between the United States, a capitalist democracy, and the Soviet Union, a state-controlled socialist system, from 1945 to 1991, sparked by tensions over how to shape the post-World War II order. The conflict was defined by ideological rivalry, massive military spending , and a nuclear arms race that brought the world to the brink of thermonuclear war. Though the two superpowers never engaged in direct combat—hence, the war remained “cold”—they waged...