Fed’s Powell Highlights Full Employment Benefits

The Federal Reserve is looking at a wide range of indicators to measure how close the economy is to reaching full employment, said US central bank chair Jerome Powell on Tuesday as he reiterated the benefits of having such a target workers who often remain on the fringes of the labor market.

“When we assess whether we are at full employment, we purposefully look at a wide range of indicators,” Powell said at a web-based conference on diversity and inclusion in economics, finance and central banks co-hosted by the Fed alongside other major monetary authorities.

In doing so, the Fed is mindful of labor market disparities, “rather than just the headlines,” Powell said, saying an economy is healthier and stronger when as many people as possible are able to work.

Fed officials have pointed to strong economic growth and employment gains as proof the economy can start to sustain itself. But Powell also said last week that the Fed will remain patient and prioritize further advances towards full employment before raising interest rates, despite nervousness about higher-than-expected inflation.

But there is growing debate among policymakers over how many more jobs the economy can create and how much longer high inflation can be tolerated, with investors currently expecting an interest rate hike in the middle of next year.

The US has created an average of 582,000 jobs a month this year, but the workforce is 3 million below its pre-pandemic level.

An announcement on whether US President Joe Biden will rename Powell for a second term as head of the central bank is expected shortly.