The U.S. economy grew at a “modest to moderate” pace this fall, with supply-chain issues and labor shortages holding back growth despite strong demand, the Federal Reserve said Wednesday.

The Fed report, a periodic collection of business anecdotes from around the country known as the Beige Book, found that consumer spending throughout the country was strong but held back by low inventories. Strong demand allowed firms to raise prices with “little pushback” from consumers, and increases were widespread throughout the economy.

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The U.S. economy grew at a “modest to moderate” pace this fall, with supply-chain issues and labor shortages holding back growth despite strong demand, the Federal Reserve said Wednesday.

The Fed report, a periodic collection of business anecdotes from around the country known as the Beige Book, found that consumer spending throughout the country was strong but held back by low inventories. Strong demand allowed firms to raise prices with “little pushback” from consumers, and increases were widespread throughout the economy.

Despite robust hiring during the period covered by the report—early October through mid-November—businesses contacted by the Fed “reported robust demand for labor but persistent difficulty in hiring and retaining employees.” Child care issues, Covid-19 safety concerns and retirements were the top issues cited for the labor crunch.

Information for the periodic Fed report was gathered before the Omicron strain of Covid-19 was identified as a variant of concern.

Businesses throughout the country reported rising input costs and said they were passing them on to customers. In the Cleveland Fed district, 80% of firms surveyed said they had higher costs over the past two months. “Gas, electric, food, raw materials, products, everything is going [up],” a logistics business said.

Most firms expect supply-chain disruptions to persist into next year, causing prices to continue to rise. Around 65% of businesses surveyed by the Cleveland Fed said they had raised prices, consistent with the past several reports.

Fed Chairman Jerome Powell told lawmakers Wednesday that the risks of higher inflation have “moved up,” and said the Fed would act to “make sure that this high inflation we’re experiencing is not entrenched.”

Labor shortages, while creating challenges for employers and contributing to rising prices, are providing workers with bargaining power for better wages and working conditions. The Minneapolis Fed relayed an anecdote from a workforce-development professional who said that workers in customer-facing jobs were “no longer willing to deal with rude customers and difficult schedules.” This business contact said many workers were successful in finding new jobs that paid better, or were setting out on their own as entrepreneurs.

Manufacturing growth throughout the country was “solid,” the Fed said, despite shortages and supply-chain snarls. In the New York Fed district, manufacturers and wholesalers “continued to express fairly widespread optimism about the near-term outlook.”

A separate survey of manufacturing activity, The ISM Manufacturing Report on Business PMI, rose to 61.1 in November from 60.8 in October, data from the Institute for Supply Management show.

The index suggested that the U.S. manufacturing sector grew at a solid rate in November, where it stood well above the 50.0 point that separates expansion from contraction. It also indicated a slight acceleration of factory activity compared with the previous month.

Write to Gabriel T. Rubin at gabriel.rubin@wsj.com