"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), “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 as optimistic: wage growth for ordinary workers slowed to the lowest year-over-year pace in five years since the post-pandemic recovery. Averaging these two months with large swings provides a clearer view of the underlying trend: the monthly average added only 22.5k jobs. Two years ago, monthly added 22.5k jobs was enough to raise concern; and today, that level may still be regarded as acceptable. Federal Reserve officials are still working to explain this change. On Friday, San Francisco Fed President Daly wrote, “It is not easy to help the public understand that an economy with zero job growth can still be consistent with full employment.” With a new round of supply shocks on the horizon, this situation is especially fragile. If the Iran war continues, high fuel costs or shortages of goods would squeeze businesses and consumers, leaving the labor market without a cushion to absorb the shock. At the same time, policy room at the Federal Reserve is even more limited because inflation concerns may weaken the certainty of rate cuts. (Source: ChainCatcher)