"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), “Fed mouthpiece” Nick Timiraos wrote that March added 178k jobs, reversing the sharp drop in February. The unemployment rate also fell to 4.3%. But some details are not so encouraging: wage growth for ordinary workers slowed to the lowest year-over-year pace in five years since the post-pandemic recovery. Averaging these two more volatile months makes the underlying trend clearer: the monthly average net new jobs were only 22.5k. Two years ago, monthly additions of 22.5k jobs were enough to raise concerns; now, such a level may still be seen as acceptable.

Federal Reserve officials are still working to explain this shift. San Francisco Fed President Daly wrote on Friday, “Helping the public understand that an economy with zero job growth can still be consistent with full employment is not easy.” With fresh supply shocks once again on the way, this situation is especially fragile. If the Iran war continues, high fuel costs or shortages of goods could squeeze businesses and consumers, leaving the labor market without 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)