Despite a sharp drop from its Q2 2020 peak, the 5.8% Q3 unemployment rate still remains uncomfortably high and well above the Fed’s preferred target. More worryingly, the last two monthly Non-Farm Payrolls (NFP) reports have come in below expectations, averaging just a little over 400k net new jobs per month. While this rate of job growth may be acceptable in more normal times, the US labor market is still millions of jobs below its pre-COVID levels and only growing tepidly despite widespread vaccine distribution and economic “reopening” across the country.
In other words, the to-date lackluster labor market recovery following the COVID recession is the reason the central bank is continuing with its unprecedented stimulus measures.
Again, similarly to the week of CPI announcements , I do not foresee any sudden market movements unless there’s freak miscommunication either from the projections or Powell himself.