Fed grapples with weak jobs data
• Federal Reserve officials grappled on Tuesday with April’s surprisingly weak employment growth, maintaining faith in the U.S. economic rebound but acknowledging the pace of the jobs recovery may prove choppier than anticipated.
The United States added only 266,000 jobs last month, about a quarter of the gain pencilled in by economists, including Fed officials themselves, in what had been anticipated would be the start of a steady run of strong job growth.
But the data has raised a broad set of questions about the complicated interplay among peoples’ decisions about working during the ongoing coronavirus pandemic, constraints like child care, the slowing pace of COVID-19 vaccinations, global supply bottlenecks for critical goods like semiconductors, and the enhanced federal unemployment benefits that may be encouraging some potential workers to stay home.
In contrast to the number of jobs created in April, job openings as of the end of March hit a record 8.1 million, narrowing the wedge with the roughly 9.8 million people still unemployed.
“What the data suggests, and what I hear anecdotally, is that labour demand and labour supply are both on the path to recovery but they are recovering at different paces and there may be friction,” Fed governor Lael Brainard told the Society for Advancing Business Writing and Editing (SABEW).
“There are still concerns over contracting the virus, the need to take public transportation,” she said, while many parents are waiting for schools to reopen.
“I do expect to see good improvement on people wanting to go to work and able to work,” Brainard added. “We are just seeing it in fits and starts,” a fact she said validated the U.S. central bank’s “patient” promise to leave crisis-level interest rates and bond-buying in place until the recovery is more complete.
Speaking separately to Yahoo Finance, Cleveland Fed president Loretta Mester laid out similar arguments.
Both Brainard and Mester noted that much may hinge on larger numbers of Americans getting vaccinated — a potentially difficult ask given the hesitancy of some adults to get inoculated.
The April jobs report has touched off a wave of debate in Washington about where the recovery stands and whether the decision to extend a weekly US$300 federal unemployment benefit until September is keeping people from accepting jobs, or whether the hiring difficulties reported by companies are pandemic-related.
“It is true that with the extension of the unemployment benefits people are in a financial position so that they can make those hard choices, about whether they feel comfortable re-entering or not,” said Mester.