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

ME News message: On April 4 (UTC+8), “Fed megaphone” Nick Timiraos wrote that March added 178,000 jobs, reversing the sharp decline seen in February. The unemployment rate also fell to 4.3%. However, some details are not very optimistic: 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: the monthly average for new job additions is only 22,500 positions. Two years ago, monthly new additions of 22,500 jobs were enough to raise alarm; today, that level may still be regarded as acceptable.

Federal Reserve officials are still working to explain this change. On Friday, San Francisco Fed Chair Daly wrote, “It isn’t easy for the public to understand that an economy with zero job growth is still consistent with full employment.” In the face of another round of renewed supply shocks, the situation is especially fragile. If the Iran war continues, high fuel costs or shortages of goods could squeeze businesses and consumers, and the labor market would lack a buffer to absorb the shock. At the same time, concerns about inflation may weaken the certainty of rate cuts, further limiting the Fed’s policy room.

(Source: ChainCatcher)