U.S. Labor Market Faces Challenges Amid Economic Shifts

Nick Timiraos, often referred to as the 'Fed's mouthpiece,' reported on April 4 that the U.S. added 178,000 jobs in March, reversing the significant decline seen in February. According to Jin10, the unemployment rate also fell to 4.3%. However, some details are less optimistic, as wage growth for ordinary workers has slowed to the lowest year-on-year rate since the post-pandemic recovery began five years ago. Averaging these two volatile months reveals a clearer underlying trend: an average monthly increase of only 22,500 jobs. Two years ago, such a level would have raised alarms, but today it might still be considered acceptable. Federal Reserve officials are still working to explain this change. San Francisco Fed President Mary Daly wrote on Friday that it is not easy to make the public understand that an economy with zero job growth can still be consistent with full employment. This situation is particularly fragile if new supply shocks occur. If the war in Iran continues, high fuel costs or commodity shortages could squeeze businesses and consumers, leaving the labor market without a buffer to absorb the shock. Meanwhile, concerns about inflation may weaken the certainty of interest rate cuts, further limiting the Fed's policy space.