Consumer spending, which fuels about 70% of overall economic activity, slowed to an annual growth rate of just 1.6% after having surged at a 12% rate in the previous quarter.
The absence of reliable and affordable child care limits which jobs people can accept, makes it harder to climb the corporate ladder and ultimately restricts the ability of the broader economy to grow.
The slowdown has been attributed to a surge in cases from the delta variant over the summer and supply chain problems, which disrupted manufacturing output in many sectors, especially auto production and helped send consumer prices rising at the fastest pace in 13 years.
Economists point to a range of factors that are likely keeping millions of former recipients of federal jobless aid from returning to the workforce. Many Americans in public-facing jobs still fear contracting COVID-19, for example. Some families lack child care.
Unemployment claims are increasingly returning to normal, but many other aspects of the job market haven’t yet done so. Hiring has slowed in the past two months, even as companies and other employers have posted a near-record number of open jobs.
In its latest survey of business conditions around the nation, the Fed said a majority of its 12 regions viewed consumer spending, the main driving force for the economy, as remaining positive despite the various speed bumps.
Procter & Gamble, the maker of Pampers diapers, Tide detergent and Crest toothpaste, said it’s raising prices on a range of goods as higher commodity and freight costs are set to take a bite out of its profits.
The International Monetary Fund called Thursday for greater efforts from wealthy nations to boost COVID vaccination rates in poorer countries, while also urging the Federal Reserve and other central banks to respond quickly if current inflation pressures prove not to be transitory.
Applications for jobless aid, which generally track the pace of layoffs, have fallen steadily since last spring as many businesses, struggling to fill jobs, have held onto their workers.
Such a move would mark the Fed’s first step back from the extraordinary efforts it has made to stimulate the economy in the wake of the pandemic.
The unexpected burst of inflation this year reflects sharply higher prices for food and energy, but also for furniture, cars, televisions, and other largely imported goods.
The Labor Department said that quits jumped to 4.3 million in August, the highest on records dating back to December 2000, and up from 4 million in July.
After hitting a pandemic low of 312,000 in early September, claims had risen three straight weeks, suggesting that the highly contagious delta variant was at least temporarily disrupting a recovery in jobs.
International Monetary Fund Managing Director Kristalina Georgieva on Tuesday cited rising risks from inflation, debt and a divergence in growth prospects between nations with access to coronavirus vaccines and those in need of shots.
Investors are increasingly worried about inflation as oil prices rise and companies continue facing supply problems that increase their costs and force them to raise prices.
Americans bought more furniture, clothes, and groceries during the month, while the delta variant caused them to pull back on traveling and eating out.
Federal Reserve Chair Jerome Powell on Wednesday stood behind the ultra-low interest rate policies he has pursued since the pandemic decimated the economy more than 18 months ago. But he acknowledged inflation has stayed higher for longer than he expected.
Federal Reserve Chairman Jerome Powell said that the unprecedented process of reopening the economy after the COVID shutdowns has resulted in a number of problems that could continue in coming months.