The article critiques the Federal Reserve's perception of the U.S. labor market, suggesting that while current unemployment rates are low, underlying conditions are deteriorating. The author expresses concern over Fed Chair Jerome Powell's assessment that the labor market is in balance, arguing that cracks are appearing, leading to higher unemployment and stagnating wage growth. The author also highlights the additional uncertainty brought about by changing trade relationships under the Trump administration, which may exacerbate these issues. The Fedâs inaction could worsen economic conditions and undermine consumer purchasing power.
The labor market appears to be broadly in balance. Yes, unemployment remains low on a historical basis and the pace of jobs growth is still healthy.
It's abundantly clear that the Fed is not yet ready to step in and support deteriorating economic conditions, reinforcing a negative feedback loop.
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