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Epidemics

Fed Official Calls for Tapering Pandemic Stimulus, Despite Slowdown in US Jobs Growth

Strategic Insights

— 1 min read

US Federal Reserve officials should press ahead with a plan to reduce their stimulus programme, despite a slowdown in US jobs growth in August, according to James Bullard, president of the St Louis Fed. Bullard dismissed concerns that the labour market recovery was faltering, pointing to a surge in job openings and labour shortages as evidence of a strong labour market. He reiterated his call for the central bank to begin scaling back its $120bn-a-month bond-buying programme, known as tapering, in the near future.

Key Takeaways:

  • James Bullard, president of the St Louis Fed, advocates for tapering the central bank's $120bn-a-month bond-buying programme, citing labour shortages and a strong labour market.
  • Bullard expects the unemployment rate to fall below 5% by the end of this year, and believes that households are "flush with income" due to personal savings and stimulus cheques.
  • The labour department's Job Openings and Labor Turnover Survey revealed that job openings surged to a fresh record in July, with 10.9 million openings, up 749,000 from the previous month.
  • Bullard acknowledged that Delta-related concerns were affecting hiring, but attributed the slowdown in hiring to supply-side issues such as enhanced unemployment benefits.
  • Employers have raised wages to attract staff, with average hourly earnings increasing 0.6% in July, and Bullard expects the labour market to be "very strong going into next year".

Statistics:

  • 10.9 million job openings in July, up 749,000 from the previous month (Source: Labour Department's Job Openings and Labor Turnover Survey).
  • $120bn-a-month bond-buying programme to be tapered in the near future (Source: James Bullard, President of St Louis Fed).
  • Unemployment rate expected to fall below 5% by the end of this year (Source: James Bullard, President of St Louis Fed).
  • $1,400 stimulus cheques and personal savings have left households "flush with income" (Source: James Bullard, President of St Louis Fed).

Sources:

  • Financial Times: Interview with James Bullard, President of St Louis Fed
  • Labour Department's Job Openings and Labor Turnover Survey
  • (Note: Sources have been cited exactly as they appeared in the original text, without addition dates or details)

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