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Powell Flags Current Supply-Side Constraints

FED
  • Powell talks about supply-side constraints in the economy:
  • In some industries, supply constraints are restraining activity. (Notes motor vehicles and semiconductors.)
  • Labor market conditions have continued to improve. Demand is very strong, and employment rose 850k in June with the leisure and hospitality sector continuing to post gains. The labor market ha ways to go. Unemp of 5.9% understates the shortfall in employment, particularly as participation in the labor market has not moved up from the low rates.
  • Pandemic-related factors such as caregiving, Covid fears, and unemp insurance appear to be weighing on job growth. But should wane in coming months, leading to strong gains.

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