"Federal Reserve mouthpiece": Low employment growth may become the new normal, but it is especially fragile in the context of war

ME News update, April 4 (UTC+8), “Federal Reserve megaphone” Nick Timiraos wrote that March added 178,000 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 increase in five years since the post-pandemic recovery. Averaging these two months with large fluctuations makes the underlying trend clearer: the monthly average adds only 22,500 jobs. Two years ago, adding 22,500 jobs per month was enough to raise concern; but today, this level may still be seen 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 is still consistent with full employment is not easy.” With another round of supply shocks arriving once again, this situation is especially fragile. If the war in Iran continues, high fuel costs or shortages of goods could squeeze businesses and consumers, leaving the labor market without a buffer to absorb the shock. Meanwhile, concerns about inflation may weaken the certainty of rate cuts, further limiting the Federal Reserve’s room for policy action. (Source: ChainCatcher)