"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 megaphone” Nick Timiraos wrote that in March, 178k new jobs were added, reversing the sharp decline seen in February. The unemployment rate also fell to 4.3%. However, some details are not as 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 months with larger fluctuations gives a clearer view of the underlying trend: the monthly average adds only 22.5k jobs. Two years ago, adding 22.5k jobs per month was enough to raise concerns; today, that 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 why an economy with zero job growth is still consistent with full employment is not easy.” With fresh supply shocks arriving again, this situation is especially fragile. If the war in Iran continues, high fuel costs or shortages of commodities 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)