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

Golden Finance reported that on April 4, “the Federal Reserve’s mouthpiece” 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 not so encouraging: wage growth for ordinary workers has 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 number of new jobs is only 22.5k. 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 shift. San Francisco Fed President Daly wrote on Friday, “Getting the public to understand that an economy with zero job growth is still consistent with full employment is not easy.” In the face of renewed supply shocks, 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 with insufficient buffer to absorb the shock. At the same time, due to inflation concerns potentially weakening the certainty of rate cuts, the Federal Reserve’s policy room is also more limited.