Category: Economy

The queue of vessels waiting to unload goods at the Port of Los Angeles, North America’s busiest container port, has fallen 80% since the start of the year as global container prices continue to slide, pointing to more easing in supply chain disruptions. 

The backlog of vessels waiting outside Los Angeles has fallen from a record high of 109 to 20 and the port moved 876,611 twenty-foot equivalent units (TEUs) in June in its best record in over 100 years.

“We’re going box for box with the record that we set for the first half just last year. So the cargo keeps moving. And the efficiencies of getting that cargo from the ship to shore by rail and truck continues to improve,” Port of Los Angeles Executive Director Gene Seroka told CNBC’s “Squawk Box Asia” on Friday. 

“We reduced that backlog of ships since the beginning of the year … now we want to get that number to zero.”

The increased efficiency is a contrast to the delays triggered by the pandemic in 2020 and 2021.

At the height of supply chain crisis, these 100 odd vessels idled outside Los Angeles and Long Beach, waiting to unload. Before Covid-19, little wait time was needed for a berth. The pandemic also hurt domestic transportation as a result of trucker shortages due to Covid-19 infections. 

While improved, conditions have not returned to pre-Covid levels and more improvements are needed, in particular the delivery of goods inland after the vessels have unloaded, Seroka said. 

“We’ve got to get the cargo picked up at the inland rail facilities by our importers much quicker than they’ve been doing thus far,” he said. 

“That’ll help the Western railroads get the equipment engine power and cruise back here to Los Angeles and keep evacuating this cargo at a faster pace than we witnessed so far.”

Seroka said the trucker strike protesting California’s new “gig worker” law at the Port of Oakland should not affect the improved pace set so far.

The easing bottlenecks on the West Coast come as container prices continue to fall from their pandemic records.

Port lockdowns and a shortage of containers in 2020 and 2021 contributed to skyrocketing leasing costs. But now there is an oversupply of containers and prices have been falling since September.

“The current situation of oversupply of containers is a result of a series of reactionary market disruptions that began soon after the outbreak of the pandemic in early 2020,” logistics platform Container xChange chief executive Christian Roeloffs said in a new analysis this week. 

“With the rise in demand, congestion at ports increased and the container capacity was held up for a considerably long period of time. This led to the panic ordering of new boxes at record levels,” he said.

“With time, as markets reopen and demand softens, the oversupply is a natural outcome of demand-supply forces balancing at new levels.”

According to Drewry’s recently published container leasing report, the global pool of shipping containers increased by 13% to almost 50 million TEUs in 2021. There is now a surplus of 6 million TEUs globally. 

While more containers bring welcomed relief for those paying for freight, Roeloffs said freight prices will not fall quickly as disruptions, while eased, remain acute. 

Economic shifts such as cooler demand in response to monetary policy and inflation will also contribute to fresh supply chain disruptions. 

“The main factor that has driven up [freight] prices has been a supply-side crunch over the past two years because of lengthening turnaround times of containers … that still holds true,” Roeloffs said. 

“Demand on the other hand has softened now.”

Goldman Sachs CEO David Solomon set the tone early this earnings season when he said inflation is “deeply entrenched” in the U.S. economy and impacting conditions on a multitude of fronts.

Since then, company leader after company leader has expressed similar sentiments.

Most say they’ve managed to navigate difficult times spurred by inflationary pressures at their highest level in more than 40 years. They report cutting costs, raising prices and generally trying to adapt models to the uncertainty of what’s ahead.

Tesla founder Elon Musk was practically apologetic on his company’s earnings call for hiking prices to meet higher costs.

“So I do feel like we’ve raised our prices. Well, we’ve raised our prices quite a few times. They’re frankly at embarrassing levels,” the mercurial electric vehicle pioneer told analysts. “But we’ve also had a lot of supply chain and production shocks, and we’ve got crazy inflation. So I am hopeful, this is not a promise or anything, but I’m hopeful that at some point we can reduce the prices a little bit.”

Nothing, however, seems certain at the moment, other than that inflation is on everyone’s mind.

Of the 91 S&P 500 companies that have reported so far, inflation has been mentioned on 85 of the analysts calls, according to a search of FactSet transcripts.

Like Musk, company officials generally expect inflation to come down from the 8.6% quarterly growth rate from a year ago, as measured by the consumer price index. The CPI accelerated 9.1% in July, the highest number since November 1981.

But they’re also not taking any chances, using pricing power now to bolster their top and bottom lines amid a highly uncertain environment.

“Our primary response to the environmental challenge of inflation is higher pricing,” said Michael F. Klein, the president of personal insurance for Dow component Travelers. “We are pleased with our actions to increase rates over the past few quarters and remain confident in our ability to achieve further increases.”

The higher prices certainly haven’t hurt profitability, with results so far countering the generally pessimistic attitude on Wall Street heading into earnings season.

With nearly 20% of the S&P 500 companies reporting so far, 78% have beaten estimates for profits, which are up 6.3% from a year ago, according to Refinitiv. The beat rate on the revenue side is 72.5%, with sales up 11.3%.

Though energy companies have been a major boost to the aggregate top and bottom lines, the overall feeling is that cash-rich consumers are able to handle the burden of soaring prices, at least for now.

“We have been able to and continue to be able to pass through our product cost inflation to our customers, and they are increasingly finding ways to pass that through to their consumers as well,” said Sysco Chief Financial Officer Aaron Alt. “We’re confident that will continue to be the case certainly in here and now.”

Economists have worried that a looming recession could chill consumer spending that has been persistent but short of the pace of inflation.

Citigroup CEO Jane Fraser said the company has been focused on what she calls the “three Rs”: Russia, rates and recession.

Russia’s invasion of Ukraine has been a contributor towards the supply chain difficulties that have aggravated inflation, which the Federal Reserve is seeking to tamp down through aggressive interest rate increases. The rate hikes are aimed at slowing an economy that contracted by 1.6% in the first quarter and is on track to have shrunk by the same amount in the Q2, according to Atlanta Fed projections.

Still, Fraser said she thinks the U.S. will avoid an official recession or at least a deep one, even though two consecutive quarters of negative growth fits the rule-of-thumb definition. The National Bureau of Economic Recession is the official arbiter on recessions and expansions.

“It’s just an unusual situation to be entering into this choppy environment when you have a consumer with strong health and such a tight labor market,” Fraser said on Citi’s earnings call. “And I think that’s where you hear so many of us not so much concerned about an imminent recession in the [United] States.”

But Solomon, the Goldman CEO, said the company is playing it safe even though its economists expect inflation to pull back in the second half of the year.

“I think our tone is cautious because the environment is uncertain. The environment is very uncertain,” he said. “There’s no question that economic conditions are tightening to try to control inflation, and as economic conditions tighten, it will have a bigger impact on corporate confidence and also consumer activity in the economy. I think it’s hard to gauge exactly how that will play out, and so I think it’s prudent for us to be cautious.”

Initial jobless claims hit their highest level since mid-November last week, the latest sign that a historically tight labor market is beginning to slow, according to Labor Department data released Thursday.

Claims totaled 251,000 for the week ended July 16, up 7,000 from the week before and above the 240,000 Dow Jones estimate.

The gain brought filings for unemployment insurance to their highest weekly level since Nov. 13, 2021 and provided another indicator that a jobs market on fire in 2021 has begun to cool this year.

Continuing claims, which run a week behind the headline number, increased to 1.384 million, the highest total since April 23.

A separate release Thursday also showed some weakness in the jobs picture.

The Philadelphia Fed manufacturing index fell to a reading of -12.3, a 9-point slide from a month ago and a considerably worse level than the 1.6 Dow Jones estimate. The number represents the percentage difference between companies reporting expansion in activity against those seeing contraction.

In particular, the employment index was 19.4, also a 9-point decline. Though that indicates continued expansion in hiring, it is the lowest reading since May 2021 and also is indicative that hiring is slowing. The average workweek reading was 6.4, falling for the fourth consecutive month and an indication that productivity could be declining.

Companies in the survey reported higher costs for salaries, with 78.6% saying they have increased wages and compensation over the past three months, with no respondents saying they cut.

The survey also showed inflation pressures still high but cooling. The prices paid and prices received indexes both fell from a month ago but remained elevated, with respective readings of 52.2 and 30.3.

The data comes with uncertainty running high about the direction of the economy.

Employment has been the primary bright spot, with nonfarm payroll gains averaging a robust 457,000 a month through the first half of the year. However, those increases have been slowing lately, with the last three months averaging 375,000.

Most other data indicates the U.S. could be in the midst of meeting the rule-of-thumb definition for a recession, with two consecutive quarters of negative growth. Gross domestic product fell 1.6% in the first quarter and is on track to decline another 1.6% in Q2, according to the Atlanta Federal Reserve.

Fed officials are expected next week to raise interest rates another 0.75 percentage point, taking benchmark overnight borrowing rates up to a range of 2.25%-2.5%. The Fed is seeking to slow an economy that has produced the highest inflation rate since 1981.

Correction: The Philadelphia Fed manufacturing index fell to a reading of -12.3, a 9-point slide from a month ago. An earlier version misstated the time period.

China’s holdings of U.S. debt have fallen below $1 trillion for the first time in 12 years amid rising interest rates that have made Treasurys potentially less attractive.

Continuing a trend that began early in 2021, China’s portfolio of U.S. government debt in May dropped to $980.8 billion, according to Treasury Department data released Monday. That’s a decline of nearly $23 billion from April and down nearly $100 billion, or 9%, from the year-earlier month.

It also marked the first time since May 2010 that China’s holdings fell below the $1 trillion mark. Japan is now the leading holder of U.S. debt with $1.2 trillion.

The debt decline comes as the U.S. Federal Reserve has been raising rates to stop inflation running at its fastest rate since 1981. When rates rise on bonds, prices drop, meaning a capital loss for investors who sell the bonds ahead of maturity.

The decline in China’s share also has been attributed to Beijing working to diversify its foreign debt portfolio.

The reporting period came before the Fed hiked benchmark overnight borrowing rates by 0.75 percentage point in June; there is another increase of the same size likely next week.

U.S. Treasury Secretary Janet Yellen has reiterated the need for the United States and its trusted trading partners to boost supply chain resilience through “friend-shoring,” but said this does not mean the U.S. is retreating from the rest of world.

In a speech made at South Korean conglomerate LG’s Science Park in Seoul on Tuesday, Yellen drummed up support from allies of the U.S. to work together in carving up more resilient supply chains among trusted partners through “friend-shoring.”

The term draws on the concepts of “onshoring” and “nearshoring,” which refer to the transferring of supply chains back home or closer to home, as opposed to having them in foreign countries. “Friend-shoring” goes beyond that but limits supply chain networks to allies and friendly countries.

The U.S. has been pushing for more security in its supply chains since the Covid pandemic started. U.S. President Joe Biden signed an order in early 2021 to review American supply chains with an aim to reduce reliance on foreign suppliers.

“Supply chain resilience is a key focus of the Biden-Harris administration. And the necessity of this work has been illustrated clearly by the events of the past two years, first by Covid-19 and our efforts to fight the pandemic and now by Russia’s brutal war of aggression in Ukraine,” Yellen said. 

“Together they have redrawn the contours of global supply chains and trade.”

“Working with allies and partners through friend-shoring is an important element of strengthening economic resilience while sustaining the dynamism and productivity growth that comes with economic integration.”

Those initiatives, however, have prompted concerns of a possible global economic decoupling, particularly as the United States and other countries seek to avoid an overreliance on China. 

Yellen said these measures do not indicate the U.S. is withdrawing from global trade. Rather, she said, they show that friendly countries are taking a longer-term perspective on vulnerabilities in an effort to make economies more productive. 

“We do not want a retreat from the world, causing us to forgo the benefits it brings to the American people and the markets for businesses and exports,” Yellen said, in reference to deepening ties with South Korea. 

“In doing so we can help to insulate both American and Korean households from the price increases and disruptions caused by geopolitical and economic risks … in that sense, we can continue to strengthen the international system we’ve all benefited from, while also protecting ourselves from the fragilities in global trade networks.”

Supply chain resilience dominated this leg of Yellen’s visit to Asia, which followed last week’s trip to Bali, Indonesia, for the Group of 20 meeting. 

South Korea’s LG also reaffirmed its latest U.S. collaboration, a $1.7 billion lithium-ion battery manufacturing expansion in Michigan, while Yellen outlined Hyundai’s electric vehicle and battery manufacturing facilities in Georgia and Samsung’s semiconductor chip plant in Texas. 

Other ventures that support supply chain resilience efforts include the recently announced Indo-Pacific Economic Framework, Yellen added.

“With ‘friend-shoring,’ South Korea and the U.S. are in an ideal spot,” James Kim, chair of AmCham in South Korea, told CNBC’s “Capital Connection” on Tuesday.

“This is the most exciting phase I have seen in the past 18 years.”

Kim said while there were more direct South Korean investments in the United States than vice versa, American interests in the Asian country are growing.

A recent survey by AmCham shows that for the first time, South Korea ranks as the second-most attractive location for regional headquarters in Asia, after Singapore, Kim said.

Consumer spending held up during June’s inflation surge, with retail sales rising slightly more than expected for the month amid rising prices across most categories, the Commerce Department reported Friday.

Advance retail sales increased 1% for the month, better than the Dow Jones estimate of a 0.9% rise. That marked a big jump from the 0.1% decline in May, a number that was revised higher from the initial report of a 0.3% drop.

Unlike many other government numbers, the retail figures are not adjusted for inflation, which rose 1.3% during the month, indicating that real sales were slightly negative.

Rising costs for food and gasoline in particular helped propel the increase, which was nonetheless broad-based against the various metrics in the report.

Excluding autos, the monthly rise also was 1%, topping the 0.7% estimate.

“The 1.0% [month-over-month] rise in retail sales in June isn’t as good as it looks, as it mainly reflects the boost to nominal sales values from surging prices,” wrote Andrew Hunter, senior U.S. economist at Capital Economics. “Accounting for the surge in prices, however, real consumption looks to have been broadly stagnant in June.”

Consumer sentiment remains relatively downbeat; a separate report from the University of Michigan registered a reading of just 51.1, better than the 50 estimate but still around record lows. Inflation expectations remain elevated, with the one-year outlook at 5.2% little changed from levels of the past months.

Markets nevertheless rallied following the morning’s economic news, with the Dow Jones Industrial Average up more than 470 points in the first half-hour of trading. Government bond yields moved lower.

Gasoline sales rose 3.6% as prices at the pump briefly topped $5 a gallon, a move that has since eased as oil prices have declined in July.

Sales at bars and restaurants increased 1%, while online sales rose 2.2%, and furniture and home store sales were up 1.4%. However, some brick-and-mortar sales, fell, with general merchandise off 0.2% due to a 2.6% decline in department stores.

The retail report shows that consumers have been mostly resilient in the face of the highest inflation rate since November 1981.

Consumer prices in June were up 9.1% over the past year, a product of record-high gas prices and spreading inflation that drove rents up to their highest monthly gain since 1986 and dental care to its biggest rise since at least 1995.

Despite the increases, consumer finances have held up well.

Debt to after-tax income has been rising, but at 9.5% is still well below longer-term levels, according to Federal Reserve data. Household net worth edged lower in the first quarter, largely a product of a decline in the stock market that reduced equity holdings by $3 trillion.

Other economic data points, though, have been weakening.

Though spending continues, consumer confidence is around record lows. Housing data has been weak lately, and regional manufacturing surveys are reflecting a slowdown. A Fed survey released earlier this week showed concerns about inflation and a recession escalating.

However, a New York Fed report Friday morning provided some good news about manufacturing.

The Empire State Manufacturing Survey for July posted an 11.1 reading, representing the percentage difference between companies seeing expansion versus contraction. That was much better than the Dow Jones estimate for a minus-2, and reflected big gains in shipments, a welcome change considering supply chain problems that have helped drive inflation.

The survey showed that prices remain elevated but the share of companies seeing increases is declining.

On the downside, companies turned pessimistic about the future, with a net 20.2% seeing worsening conditions over the next six months.

Fed policymakers have responded to the inflation issue with a series of rate increases and are expected to approve another hike later this month that could hit 1 percentage point, the largest such increase since the central bank began using its benchmark rate to implement policy nearly 30 years ago.

Fed Governor Christopher Waller said Thursday that the retails sales report would be a key input in determining whether to hike by 75 basis points or 100 basis points at the July 26-27 meeting.

Traders reduced their bets on the possibility of the 100 basis point hike occurring, cutting the probability to about 42% Friday morning from about double that just a day before, according to CME Group data.

Inflation hit hard at the wholesale level in June, as producer prices surged a near-record amount from a year ago due to a big jump in energy costs, the Bureau of Labor Statistics reported Thursday.

The producer price index, a measure of the prices received for final demand products, increased 11.3% from a year ago, the highest reading since the record 11.6% in March.

Of that gain, almost 90% came from a 10% increase in final demand energy costs as prices for oil, natural gas and other products soared during the month.

Excluding energy, as well as food and trade service prices, so-called core PPI rose 6.4% on a 12-month basis, a deceleration from the 6.8% gain in May.

On a monthly basis, the core measure increased just 0.3%, below the 0.5% Dow Jones estimate. Headline PPI rose 1.1% on the month, higher than the 0.8% estimate.

The release comes one day after the BLS reported that the consumer price index, which measures final-sale prices in the marketplace, surged 9.1%, the highest 12-month gain since November 1981.

In a separate Labor Department report, weekly jobless claims rose to 244,000 for the week ended July 9, the highest number since Nov. 20, 2021. Continuing claims, which run a week behind the headline number, fell to 1.33 million, a decline of 41,000.

While there are signs the jobs market is weakening, the focus has been on inflation.

Energy and food prices have been particularly burdensome, but the June reports show price pressures are broadening.

There were a few optimistic signs in the PPI report — prices for chicken eggs, for instance, tumbled 30.2%, while iron and steel scrap prices were off 10.4%.

However, Federal Reserve officials are expected to keep pressing forward on interest rate hikes to bring inflation down closer to their longer-run 2% goal.

Following the CPI release, traders were pricing in an 86% chance the central bank, at its meeting later this month, will raise benchmark interest rates by a full percentage point. That would be the largest such increase since the early 1980s.

Shoppers paid sharply higher prices for a variety of goods in June as inflation kept its hold on a slowing U.S. economy, the Bureau of Labor Statistics reported Wednesday.

The consumer price index, a broad measure of everyday goods and services related to the cost of living, soared 9.1% from a year ago, above the 8.8% Dow Jones estimate. That marked the fastest pace for inflation going back to November 1981.

Excluding volatile food and energy prices, so-called core CPI increased 5.9%, compared with the 5.7% estimate. Core inflation peaked at 6.5% in March and has been nudging down since.

On a monthly basis, headline CPI rose 1.3% and core CPI was up 0.7%, compared to respective estimates of 1.1% and 0.5%.

Taken together, the numbers seemed to counter the narrative that inflation may be peaking, as the gains were based across a variety of categories.

“CPI delivered another shock, and as painful as June’s higher number is, equally as bad is the broadening sources of inflation,” said Robert Frick, corporate economist at Navy Federal Credit Union. “Though CPI’s spike is led by energy and food prices, which are largely global problems, prices continue to mount for domestic goods and services, from shelter to autos to apparel.”

The inflation reading could push the Federal Reserve into an even more aggressive position.

Traders upped their bets on the pace of interest rate increases ahead. For the July 26-27 meeting, a full percentage point move now has a better than even chance of happening, according to the CME Group’s FedWatch tool as of 10:40 a.m. ET.

“U.S. inflation is above 9%, but it is the breadth of the price pressures that is really concerning for the Federal Reserve.” said James Knightley, ING’s chief international economist. “With supply conditions showing little sign of improvement the onus is the on the Fed to hit the brakes via higher rates to allow demand to better match supply conditions. The recession threat is rising.”

Energy prices surged 7.5% on the month and were up 41.6% on a 12-month basis. The food index increased 1%, while shelter costs, which make up about one-third of the CPI rose 0.6% for the month and were up 5.6% annually. This was the sixth straight month that food at home rose at least 1%.

Rental costs rose 0.8% in June, the largest monthly increase since April 1986, according to the BLS.

Stocks mostly slumped following the data while government bond yields surged.

Much of the inflation rise came from gasoline prices, which increased 11.2% on the month and just shy of 60% for the 12-month period. Electricity costs rose 1.7% and 13.7%, respectively. New and used vehicle prices posted respective monthly gains of 0.7% and 1.6%.

Medical-care costs climbed 0.7% on the month, propelled by a 1.9% increase in dental services, the largest monthly rise ever recorded for that sector in data that goes back to 1995.

Airline fares were one of the few areas seeing a decline, falling 1.8% in June though still up 34.1% from a year ago. The meat, poultry, fish and eggs category also dropped 0.4% for the month but is up 11.7% on an annual basis.

The increases marked another tough month for consumers, who have been suffering through soaring prices for everything from airline tickets to used cars to bacon and eggs.

For workers, the numbers meant another hit to the wallet, as inflation-adjusted incomes, based on average hourly earnings, fell 1% for the month and were down 3.6% from a year ago, according to a separate BLS release.

Policymakers have struggled to come up with answer to a situation that is rooted in multiple factors, including clogged supply chains, outsized demand for goods over services, and trillions of dollars in Covid-related stimulus spending that has made consumers both flush with cash and confronted with the highest prices since the early days of the Reagan administration.

Federal Reserve officials have instituted a series of interest rate increases that have taken benchmark short-term borrowing costs up by 1.5 percentage points. The central bank is expected to continue hiking until inflation comes closer to its 2% longer-run target rate.

White House officials have blamed the uptick in prices on Russia’s invasion of Ukraine, though inflation was already moving aggressively higher before that attack in February. President Joe Biden has called on gas station owners to lower prices.

The administration and leading Democrats also have blamed what they call greedy corporations for using the pandemic as an excuse to raise prices. After-tax corporate profits, however, have increased just 1.3% in aggregate since the second quarter of 2021, when inflation took hold.

In a statement following the report, Biden said “tackling inflation is my top priority,” and repeated previous calls for oil and gas companies to lower prices and Congress to vote on legislation he said will reduce costs for various products and services.

There is some reason to think the July inflation numbers will cool.

Gasoline prices have come down from their June peak, with a gallon of regular falling to $4.64, a 4.7% drop for the month, according to Energy Information Administration data.

The S&P GSCI commodities index, a broad-based measure of prices for multiple goods, has fallen 7.3% in July, though it remains up 17.2% for the year. That has come as wheat futures have fallen 8% since July 1, while soybeans are down 6% and corn is off 6.6% during the same period.

“I see a light at the end of the tunnel,” said Brian Antonellis, senior vice president of fleet operations for Fleet Advantage, a leasing and asset management company for the trucking industry based in Fort Lauderdale, Florida.

Antonellis expects production capacity to ramp up gradually, helping to create a more competitive environment for an industry that has felt the strain of rising fuel prices, a historically tight labor market and the supply chain issues that have hampered the ability to get products to shelves.

“For probably 10 to 15 years before the pandemic, the industry fell into a stable routine where costs up across the board somewhere between 1 to 3 percent a year. It was easy to budget, it was easy to forecast, it was easy to build into rates,” he said. “The challenge we face today is it’s not that 1-3 percent anymore, it’s 10 to 20 percent depending on what cost bucket you’re talking about.”

Still, he said trucking companies are managing to get through with pricing power and creative financing.

“I do think people honestly are not trying to overcharge the customer,” Antonellis said. “They’re not being predatory about it. But they are trying to find that fine line. What do we pass forward? How do we look at the costs coming in?”

With the U.S. economic picture getting increasingly cloudy, he acknowledged that the industry is not “recession-proof.”

“There are going to be challenges,” Antonellis said. “I don’t think it’s all negative. I do think there will be challenges for the next six months. But I do think we’re on an upswing.”

Correction: The June CPI gain was the strongest since November 1981. An earlier version misstated the month. The estimate for core CPI was 5.7%. An earlier version misstated the percentage.

A Federal Reserve economic survey released Wednesday pointed to elevated recession fears along with a belief that soaring inflation will last at least through the end of the year.

The central bank’s “Beige Book,” a collection of views from across its 12 districts, noted the economy is growing at just a “modest” pace since the last report in mid-May.

Along with that, business contacts reported a general slowdown in demand, with five of the districts expressing “concerns over an increased risk of recession.”

“Similar to the previous report, the outlook for future economic growth was mostly negative among reporting Districts, with contacts noting expectations for further weakening of demand over the next six to twelve months,” the report stated.

On inflation, which is running at its fastest annual rate since November 1981, the report found “substantial price increases” across the country. Prices in areas such as lumber and steel had moderated, but there were “significant” increases in food, energy and other commodities.

Companies, however, reported that they are still able to pass along the price increases to customers, a further inflationary sign.

“While several Districts noted concerns about cooling future demand, on balance, pricing power was steady, and in some sectors, such as travel and hospitality, firms were successful in passing through sizable price increases to customers with little to no pushback,” the Beige Book stated. “Most contacts expect pricing pressures to persist at least through the end of the year.”

Labor markets remained tight, though that had alleviated somewhat as demand fell. Companies in four districts said they were considering or had given bonuses to offset rising prices.

In two districts, workers were looking for higher pay to compensate for inflation that reached 9.1% year-over-year in June.

Recession fears have grown recently as consumers battered by higher prices have slowed activity and domestic investment has cooled. The economy contracted 1.6% in the first quarter, and the Atlanta Fed has GDP on pace to decline 1.2% in the second quarter, meeting the rule-of-thumb recession definition.

Responding to higher costs across the board, the Fed has instituted a series of rate hikes aimed at taming inflation.

Following Wednesday’s consumer price index report that also showed inflation excluding food and energy rose at a brisk 5.9% pace, traders upped their bets on a more aggressive Fed, now assigning an 83% probability that the central bank will hike benchmark borrowing rates a full point at its meeting later in July, according to CME Group data.

Atlanta President Raphael Bostic said Wednesday afternoon that “everything is in play” regarding potential rate increases and said a 100 basis point, or full percentage point, increase could be on the table for the July 26-27 meeting, according to a Reuters account.

Federal Reserve officials rolled out strong language Friday to describe their approach to inflation, promising a full-fledged effort to restore price stability.

In its semiannual report on monetary policy – a precursor to Chairman Jerome Powell’s appearance before Congress next week – the central bank promised it would launch a full effort to bring down inflation pressures running at their fastest pace in more than 40 years.

“The Committee’s commitment to restoring price stability — which is necessary for sustaining a strong labor market — is unconditional,” the Fed said in a report to Congress.

That marks the Fed’s strongest statement yet, affirming its commitment to continue raising interest rates and otherwise tightening policy to solve the economy’s paramount issue.

The statement did not elaborate on what “unconditional” means.

Earlier this week, the Fed raised its benchmark interest rate three quarters of a percentage point in a further effort to slow demand. Market participants worry that the Fed tightening could bring on a recession, though Powell said he still thinks that can be avoided.

That rate hike came after a move in May to raise rates by half a point. This week’s move was the most aggressive since 1994.

Along with rate hikes, the Fed also is reducing assets from its $9 trillion balance sheet by allowing some proceeds from bonds it holds to roll off.

Earlier in the day, Powell himself made a similar vow, saying he and the rest of the Fed are “acutely focused” on bringing down inflation.

Correction: The comments from Fed officials were in the central bank’s semiannual report on monetary policy. An earlier version misstated the timing.