US Fed says labor market balanced, signals immigration slowdown
The US Federal Reserve indicates that the labor market is balanced and highlights a slowdown in immigration. The Federal Reserve stated on Friday that a significant decline in immigration has resulted in a slower growth of the labor supply, contributing to the maintenance of balance in the labor market as job growth moderates. “Labor supply has increased less robustly than in previous years, with immigration appearing to have slowed sharply since the middle of last year and the labor force participation rate having declined a bit,” the Fed said in its semi-annual report to Congress on monetary policy, released on Friday.
The report characterized the labor market as being in “solid shape,” with job growth occurring at a “moderate” pace and the unemployment rate remaining low. “As labour demand has gradually eased over the past few years, a variety of measures suggest the labor market has moved into balance and is now less tight than just before the pandemic,” the report said. The advantages seem to be widespread, as the unemployment rates have stayed stable over the past year and are at relatively low levels across various categories of workers, including age, education, sex, and racial and ethnic groups, according to the Fed.
The report underscored the communication from Fed Chair Jerome Powell and other officials that monetary policy is suitably aligned for policymakers to bide their time for greater clarity on the economic outlook. Officials maintained interest rates at their current levels on Wednesday, consistent with their approach throughout the year, as they aim to gather further insights into the economic implications of President Donald Trump’s policies.
