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

Odaily Planet Daily reports that “the Federal Reserve’s megaphone” Nick Timiraos, in an article, said that March added 178k jobs, reversing the sharp decline in February. The unemployment rate also fell to 4.3%. But some details are not so optimistic: wage growth for ordinary workers slowed to the lowest year-over-year increase since the five-year recovery following the pandemic. Averaging these two more volatile months gives a clearer view of the underlying trend: the monthly average net job gains were only 22.5k positions. Two years ago, monthly net job gains of 22.5k would have been enough to raise alarms; today, such a level may still be considered acceptable. Federal Reserve officials are still working to explain this change.

On Friday, San Francisco Fed President Daly wrote, “Helping the public understand that an economy with zero job growth still aligns with full employment is not easy.” In the face of fresh supply shocks, this situation is especially fragile. If the war in Iran continues, high fuel costs or shortages of goods could squeeze businesses and consumers, leaving the labor market without a cushion to absorb the shock. At the same time, concerns about inflation could weaken the certainty of rate cuts, further limiting the Fed’s policy room. (Jin10)