By Howard Schneider and Ann Saphir
WASHINGTON (Reuters) – Federal Reserve officials grappled with shockingly weak April job growth on Tuesday, keeping faith in the U.S. economic rebound, but acknowledging that the pace of the recovery in the labor market may turn out to be more. volatile than anticipated.
The United States added just 266,000 jobs last month, about a quarter of the gain expected by economists, including the Fed’s own officials, in what had been anticipated to be the start of a steady streak of strong job growth.
But the data has raised questions about the difficult interplay between people’s decisions about work during the pandemic, constraints such as childcare, slowing the pace of vaccinations, bottlenecks in the global supply of critical products, and improved 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 at the end of March reached a record 8.1 million, narrowing the gap with around 9.8 million people still unemployed.
“What the data suggests, and what I hear anecdotally, is that the demand and supply of labor are on the road to recovery, but they are recovering at different rates and there may be friction,” said the governor. from the Fed, Lael Brainard, a Society for Advancing Business Writing and Editing (SABEW).
“There are still concerns about the virus, the need to use public transport,” he said, while many parents wait for schools to reopen.
“I hope to see a good improvement in people who want to go to work and can work,” added Brainard. “We are seeing it intermittently,” a fact that, he said, validated the central bank’s “patient” promise to keep interest rates at crisis level and to buy bonds until the recovery is more complete.
Speaking separately with Yahoo Finance, Cleveland Fed Chair Loretta Mester made similar arguments. Both Brainard and Mester noted that a lot may depend on more Americans getting vaccinated, a possibly difficult subject given the hesitancy of some adults to do so.
The April employment report has sparked debates in Washington about where the recovery is and whether the decision to extend a weekly federal unemployment benefit of $ 300 through September prevents people from accepting jobs, or whether the hiring difficulties reported businesses are just part of life after a pandemic.
“It is true that with the extension of unemployment benefits people are in a financial position to be able to make those difficult decisions, about whether they feel comfortable reentering or not,” Mester said, adding that the benefits themselves are not causing the loss. trouble.
The market expects new consumer price data this week to fuel the debate as to whether the Fed is creating risks of its own by holding monetary policy too long.
Brainard, however, said he expected the pressure from price increases to ease over time as well, just as the difficulties in the labor market are resolved.
“As long as supply chain congestion and other reopening frictions are transient, they are unlikely to drive persistently higher inflation on their own,” Brainard said, noting that some of the forces that could drive prices Higher now, such as an increase in demand as people return to normal, for example, will not be repeated.
(Reporting by Howard Schneider and Ann Saphir, Edited in Spanish by Manuel Farías)