"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), Nick Timiraos of the “Fed megaphone” wrote that March added 178,000 jobs, reversing the sharp drop seen in February. The unemployment rate also fell to 4.3%. But some details are less optimistic: wage growth for ordinary workers slowed to the lowest year-over-year pace in the five years since the post-pandemic recovery. Averaging these two more volatile months makes it easier to see the underlying trend: average monthly job gains are only 22,500 positions. Two years ago, monthly additions of 22,500 jobs were enough to raise concern; today, that level may still be viewed as acceptable.

Federal Reserve officials are still working to explain this shift. On Friday, San Francisco Fed President Daly wrote: “Helping the public understand that an economy with zero job growth still corresponds to full employment is not easy.” In a situation where renewed supply shocks hit again, this is particularly fragile. If the Iran war continues, high fuel costs or shortages of goods would squeeze businesses and consumers, leaving the labor market without a buffer to absorb the impact. At the same time, due to concerns about inflation that could weaken the certainty of rate cuts, the Federal Reserve’s policy room is even more limited. (Source: ChainCatcher)