Unemployment Is Low. That Doesn’t Mean the Economy Is Fine.

Unemployment Is Low. That Doesn’t Mean the Economy Is Fine.

International and Arab News

The Federal Reserve chair, Jerome Powell, was correct on Wednesday when he said in a news conference that the unemployment rate is “just about as low as it’s been in 50 years.”

But that does not necessarily mean, as Powell also said, that “the American economy is very strong and well positioned to handle tighter monetary policy.”

While the low unemployment rate is great for workers, it doesn’t shield the US economy from the risk of a recession triggered by, say, the war in Ukraine or China’s Covid-19 lockdowns. Powell and other Fed officials need to keep those risks in mind as they raise interest rates to stamp out inflation.

The US economy added 428,000 nonfarm payroll jobs in April and the unemployment rate stayed at 3.6 percent, the Bureau of Labor Statistics said on Friday. “Job growth was widespread, led by gains in leisure and hospitality, in manufacturing and in transportation and warehousing,” the bureau reported.

Trouble is, that’s a rearview mirror look at the economy. If you wait until the jobless rate starts rising to try to rescue growth, you’re already too late. Typically the number of people on payrolls in the United States falters when the overall economy