(Businesshala) – The US job market will continue to feel the effects of COVID-19, but it is too early to say it is “stagnating”, San Francisco Federal Reserve Chair Mary Daly said on Sunday.
When asked about the second straight month of disappointing job growth in September, Daly said on the CBS weekend news program “Face the Nation” that “it will have these ups and downs, especially with the Delta version.”
“So I think it’s too early to say it’s stopping, but of course we’re seeing the pain of COVID and the pain of the delta version impacting the labor market,” she said.
Daly’s comments on Friday came after the Labor Department reported that just 194,000 new jobs were created last month, less than half the number expected by economists in a Businesshala poll. While the unemployment rate fell to an 18-month low of 4.8%, it was partly a factor in people leaving the US workforce.
Coupled with an equally disappointing employment report card for August, recent data has raised concerns that the US economy will take longer than expected to make up for the remaining 5 million jobs lost by the coronavirus pandemic, and that high inflation, There are factors like souring and the like in consumer sentiment. The persistence of COVID-19 will affect growth.
Daly said he always thought the delta version of the coronavirus would create headwinds for the economy, but he doesn’t expect it to trigger a recession.
“I always expected that Delta would take a toll, just not put us in another recession, and we are seeing that toll,” she said. “We see it disrupting families, disrupting schooling, disrupting people’s ability to go to work and feel safe about it.”
“Delta has taken a toll, but it hasn’t derailed us yet,” Daly said. “As COVID goes, so does the economy.”
Asked about inflation, Daly said the price pressures US consumers are facing are “painful” but directly related to COVID-19 and are not expected to persist . This echoes her and several other Fed officials’ assessments that the current bout of high inflation is “transient,” even though it has progressed further than most policymakers initially expected.
“Everyone is feeling the rising prices of energy, food, basic services, and it’s painful because we’re not used to seeing it,” Daly said. “It’s an eye-catcher in some categories.”
“We have really worried-to-be-out-spending consumers hitting a wall of supply constraints, and of course prices are going to go up,” Daly said. “But I don’t see it as a long-term event.”
Daly and other Fed officials are engaged in discussions about when and how to begin extracting the extraordinary support it has provided for the economy during the pandemic. Even with Friday’s soft payrolls report, Fed officials are still expected to move forward with the first phase of that withdrawal in the form of their next meeting in early November.