Fed’s Barkin Sees ‘Long Way to Go’ in U.S. Labour-Market Progress

• Federal Reserve Bank of Richmond President Thomas Barkin said the U.S. labour market isn’t close to its pre-pandemic levels and he wants to see much more progress before slowing central bank asset purchases. “I still think we’ve got a long way to go on the job front,” Barkin said Tuesday in a broadcast interview with MNI Market News, pointing out that employment was 7.6 million below the pre-COVID-19 level. 
• Further employment gains will be needed before tapering bond purchases, the Richmond Fed leader said, even as inflation has risen more than the central bank’s 2% target. The policy-setting Federal Open Market Committee has pledged to keep buying $120Bn in Treasuries and mortgage-backed securities every month until there is “substantial further progress” on the committee’s goals. 
• The employment-to-population ratio hasn’t recovered since falling early last year as Americans left the workforce, Barkin said. Workers may have left for a variety of reasons, including enhanced unemployment insurance, child care issues with children at home, and worries about health due to the pandemic, he said. 
• Fed officials will be focused on Friday’s employment report as the latest gauge of progress. Payrolls may have risen by 700,000 in June, according to the median estimate in a Bloomberg survey of economists. That would be the biggest increase since March. 
• Barkin’s view was echoed by Fed Minneapolis President Neel Kashkari, who said the U.S. economy has a long way to go to fully recover from the pandemic but he expects employment to pick up after the summer months.

(Source: Bloomberg)