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

ME News message, April 4 (UTC+8), in an article by “Federal Reserve megaphone” Nick Timiraos, it was noted that March added 178,000 new jobs, reversing the sharp drop 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 five years since the post-pandemic recovery. After averaging these two months with larger fluctuations, the underlying trend becomes clearer: the monthly average net job gains are only 22,500 positions. Two years ago, monthly net additions of 22,500 jobs were enough to raise concerns; but now, such a level may still be considered acceptable.

Federal Reserve officials are still trying to explain this change. On Friday, San Francisco Fed President Daly wrote: “Helping the public understand that an economy with zero job growth is still consistent with full employment is not easy.” With another round of supply shocks coming again, this situation is especially fragile. If the war in Iran continues, higher fuel costs or shortages of goods could squeeze businesses and consumers, and the labor market would lack a buffer to absorb the shock. Meanwhile, because concerns about inflation may weaken the certainty of rate cuts, the Fed’s policy room is even more limited. (Source: ChainCatcher)