Fed Report Shows Weak US Growth Outlook With Inflation Cooling

High prices and a tight labor market weighed on US economic prospects over the next year, though inflation showed signs of decelerating, the Federal Reserve said.

“The outlook for future economic growth remained generally weak, with contacts noting expectations for further softening of demand over the next six to twelve months,” the Fed said Wednesday in its Beige Book report, typically published two weeks before each meeting of the policy-setting Federal Open Market Committee.

Price levels “remained highly elevated,” but nine districts reported some degree of moderation in their rate of increase, the report showed. The price of food, rent, utilities and hospitality services, in particular, rose substantially across all 12 Fed districts.

Labor markets remained tight and labor shortages weighed on several sectors. That -- plus continued supply-chain snarls -- hampered manufacturing, the Fed said. Wages rose in all districts but at a slower pace than in early July, when it last published the Beige Book.

The Fed has been raising interest rates aggressively to try and cool demand to bring down consumer inflation that has remained above 8% for five straight months. A separate release Friday showed US hiring remains robust, and a report next week will detail consumer prices for the month of August.