Federal Reserve Bank of New York President William C. Dudley said a slowdown in the pace of employment growth in March highlights the need to maintain the pace of bond purchases.
“After an encouraging pickup in the pace of job creation around the turn of the year, the employment report for March showed a gain of only 88,000 jobs,” Dudley said today according to prepared remarks for a speech in Staten Island. “While I don’t want to read too much into a single month’s data, this underscores the need to wait and see how the economy develops before declaring victory prematurely.”
Dudley expressed support for continuing Chairman Ben S. Bernanke’s $85 billion a month of bond purchases in a speech last month. That was before the March jobs report from the Labor Department showed the unemployment rate fell to 7.6 percent, as people abandoned the labor force, and the pace of employment creation slowed from the 268,000 jobs added in February.
The slowdown, “along with the large amount of fiscal restraint hitting the economy now, makes me more cautious,” Dudley said. “We have seen only a moderate improvement in labor market conditions over the past six months or so.”
Dudley’s depiction of “moderate” labor-market improvement falls short of the substantial gains that Fed officials have identified as their goal for winding down their record monetary stimulus.
“I see the current pace of asset purchases as appropriate,” Dudley said at a Staten Island Chamber of Commerce breakfast. He devoted about half of his remarks to a discussion of regional economic conditions, saying that some Staten Island neighborhoods are “not yet back to normal” following Superstorm Sandy which struck the region in October.
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