U.S. added 178k jobs in March, and Federal Reserve officials say low growth may become the new normal, but it is fragile amid wartime conditions

Gate News message: On April 4, Federal Reserve watcher Nick Timiraos wrote that the U.S. added 178k jobs in March, reversing the sharp decline seen in February, and the unemployment rate fell to 4.3%. However, some details are less than encouraging—the growth in wages for ordinary workers slowed to the lowest year-over-year pace in five years since the post-pandemic recovery. After averaging out the two more volatile months of February and March, the monthly average job gains were only 22.5k positions. Two years ago, monthly job gains of 22.5k would have been enough to raise alarms; but today, such a level may still be seen as acceptable. Federal Reserve officials are still working to explain this change. San Francisco Fed President Daly wrote on Friday: “It’s not easy to help the public understand how an economy with zero employment growth can still be consistent with full employment.” With fresh supply shocks again coming on the horizon, this situation is especially fragile. If the war in Iran continues, high fuel costs or shortages of goods could squeeze businesses and consumers, leaving the labor market without a buffer to absorb the shock. Meanwhile, concerns about inflation could further weaken the certainty of rate cuts, leaving the Federal Reserve with even less policy room.