“Fed’s Mouthpiece”: Low Employment Growth May Become the New Normal, But Especially Vulnerable in the Context of War

Odaily Planet Daily News – Nick Timiraos, known as the “Fed’s Mouthpiece,” wrote that March saw an increase of 178,000 jobs, reversing the sharp decline in February. The unemployment rate also dropped to 4.3%. However, some details are less optimistic: wage growth for ordinary workers has slowed to its lowest year-over-year rate in the five years since the post-pandemic recovery. Averaging these two highly volatile months provides a clearer view of the underlying trend: a monthly average of only 22,500 new jobs. Two years ago, a monthly increase of 22,500 jobs would have been cause for alarm; today, such a level might still be considered acceptable. Federal Reserve officials are still working to explain this shift. San Francisco Fed President Mary Daly wrote on Friday: “It’s not easy to help the public understand that an economy with zero job growth can still align with full employment.” This situation is particularly fragile in the face of renewed supply shocks. If the Iran war persists, high fuel costs or commodity shortages could squeeze businesses and consumers, leaving the labor market without a buffer to absorb the impact. Meanwhile, inflation concerns may weaken the certainty of rate cuts, further limiting the Fed’s policy space. (Jin10)