"Federal Reserve mouthpiece": Low employment growth may become the new normal, but it is especially fragile in the context of war

ME News update: On April 4 (UTC+8), “Fed’s megaphone” Nick Timiraos wrote that March added 178,000 new jobs, reversing the sharp drop seen in February. The unemployment rate also fell to 4.3%. However, some details are not very encouraging: wage growth for ordinary workers slowed to the lowest year-over-year pace in the five years since the post-pandemic recovery. Averaging these two more volatile months makes the underlying trend clearer: average monthly net job gains were only 22,500 positions. Two years ago, 22,500 new jobs per month was enough to raise alarms; today, that level may still be viewed as acceptable.

Federal Reserve officials are still working to explain this change. On Friday, San Francisco Fed President Daly wrote: “For the public to understand that an economy with zero employment growth is still consistent with full employment is not easy.” This situation is especially fragile in the face of fresh supply shocks. If the Iran war continues, high fuel costs or shortages of commodities could squeeze businesses and consumers, leaving the labor market without a buffer to absorb the shock. Meanwhile, because concerns about inflation may weaken the certainty of rate cuts, the Fed’s policy space is even more limited. (Source: ChainCatcher)