The Federal Reserve said Wednesday that the economy grew at a modest pace at the end of 2021 but was still being held back by ongoing supply-chain disruptions and labor shortages.

Omicron Threw a Wrench

In its latest survey of business conditions around the country, the Fed said its 12 regional banks found that the economy was continuing to grow. But many regions reported a sudden pullback in spending on leisure travel, hotels and restaurants because of the rapid spread of the omicron variant of the coronavirus.

“Although optimism remained high generally, several districts cited reports from businesses that expectations for growth over the next several months cooled somewhat during the last few weeks” of 2021, a period when COVID cases were rising sharply.

The Fed survey, known as the beige book, will form the basis for discussions when the central bank holds its next meeting on Jan. 25-26.

In testimony Tuesday at his confirmation hearing for a new four-year term leading the central bank, Fed Chair Jerome Powell warned that high inflation could make it harder to restore the job market to full health.

Food, Gas, Rent Prices Top of Mind

At the Fed's last meeting in December, Powell said the central bank was accelerating its efforts to tighten credit, with the goal of restraining inflation before surging prices became entrenched. His comments came as U.S. households are under pressure from rising prices for food, gas, rent and many other items.

The government reported Wednesday that consumer prices rose 7% over the past 12 months, the fastest pace since 1982.