"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), “Federal Reserve megaphone” Nick Timiraos wrote that March added 178k jobs, reversing the sharp decline in February. The unemployment rate also fell to 4.3%. But some details are not quite encouraging: wage growth for ordinary workers has slowed to the lowest year-over-year pace in the five years since the post-pandemic recovery. Averaging these two months with larger fluctuations gives a clearer picture of the underlying trend: the monthly average net job gains are only 22.5k positions. Two years ago, monthly net job gains of 22.5k would have been enough to raise concerns; today, such a 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, “Helping the public understand that an economy with zero job growth still aligns with full employment is not easy.” With new supply shocks returning, this 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, leaving the Fed with more limited policy space. (Source: ChainCatcher)