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

ME News update: On April 4 (UTC+8), “Fed 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 less 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 added only 22.5k jobs. Two years ago, adding 22.5k jobs per month would have been enough to raise alarms; 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, “Getting the public to understand that an economy with zero job growth still aligns with full employment isn’t easy.” With another supply shock hitting again, this situation is especially fragile. If the Iran war continues, higher fuel costs or shortages of commodities could squeeze businesses and consumers, leaving the labor market without sufficient buffer to absorb the shock. Meanwhile, concerns about inflation may weaken the certainty of rate cuts, further limiting the Fed’s policy room. (Source: ChainCatcher)