Fed Officials: Employment Down Significantly, Businesses Reluctant to Hire

U.S. economic growth "has come roaring back" and some metrics including consumption, housing, and manufacturing are now "extremely healthy," Philadelphia Federal Reserve Bank President Patrick Harker said during a virtual event as part of the Official Monetary and Financial Institutions Forum.

"But even as GDP has almost entirely recouped its losses from last year, employment remains down significantly," Harker said.

While some workers are seeing their incomes rise, there are still nearly 7.6 million fewer people working than before the pandemic, he said. The jobs hole grows to 10.6 million jobs if you factor in the job growth taking place before the pandemic, when the economy was adding about 200,000 jobs a month, Harker said.

Atlanta Fed Bank President Raphael Bostic, speaking on the same panel, said many business leaders are reluctant to hire workers because they are unsure of what their demand will be after the economy stabilizes.

But Bostic said it is too soon to know if demand for workers will remain low as the economy continues to grow.

Both Fed officials said U.S. policymakers need to invest in infrastructure, including expanding access to broadband internet, to ensure that the economy is more equitable. They also said some workers need help transferring into higher paying jobs that don't require college degrees.

"We really need an economy that works for everyone," Bostic said.

Fed officials agreed last week to leave interest rates near zero and to keep purchasing $120 billion a month in bonds. But central bank officials also moved their projections for when the Fed will start to lift interest rates, with 13 of 18 policymakers foreseeing a "liftoff" in borrowing costs by 2023.

Bostic has said he believes the Fed will need to start raising interest rates in 2022, a more-aggressive timeline than most of his colleagues.