Data Shows Fed U.S. Far Away from Full Employment!

The unemployment rate in the United States declined in August to 5.2%, in line with market expectations, reaching its lowest level since the beginning of the coronavirus pandemic in March 2020.

But the data also showed a much less than expected increase in nonfarm payrolls, with an increase of 235,000.

In addition, data showed a rise in the jobless rate among African Americans, to 8.8% from 8.2%, which is raising concerns over progress towards achieving the Federal Reserve’s target of restoring pre-pandemic full employment, with unemployment among Whites at 4.5%.

On a more positive note, the labor force participation rate among African Americans increased in August to 61.6%, matching the same metric among White Americans.

Black employment to population ratio reached 56.2%, up from 54.7% in January, while for the White the employment to population ratio is at 58.8%, compared with 57.9% in January.

Many have discussed the disparity in the American economy and how it was magnified by the pandemic, and Powell will likely discuss the risks of inequality and inequity on the economy and society in the broader sense.

Many minorities were severely impacted by the pandemic and its subsequent economic hardships, and many market sectors were variably impacted by the pandemic, recovering, or receiving support and stimulus.

Powell has previously preached a vision of job gains across the market, including low-income minorities, as a result of monetary and fiscal stimulus measures and the Fed’s easing policies.

It is worth noting that a number of states, more than half of the U.S., recently ended their extra unemployment support paychecks, to encourage more people to look for jobs, but the results of the decision remain debatable.

The Federal Open Market Committee (FOMC) is holding its sixth meeting this year on September 21-22, where it is expected to decide on scaling back the massive asset purchases, especially the mortgage-backed securities.