Fed officials, new data start lowering expectations for US jobs

Federal Reserve officials and new Dallas Fed  data have begun lowering expectations for May jobs growth in the United  States as business hiring plans continue to outrun the supply of people  able or willing to work.

Dallas Federal Reserve president Robert  Kaplan said Friday that hiring difficulties have continued through May,  and will likely lead to another weak jobs report following the  lower-than-expected 266,000 positions added in April.

A survey  published by the Dallas Fed earlier in the day, meant to provide a  mid-month check on national employment trends, pointed to weakening job  growth as well.

That has been attributed to a number of factors  including ongoing unemployment benefit payments and a lack of child  care, and "these structural issues, which we saw in the report for  April...all those tensions are not going to go away" immediately, Kaplan  said at a Dallas Fed conference on technology. "We think you are going  to see another odd or unusual report...Businesses are telling us they  got plenty of demand but they cannot find workers either skilled or  unskilled."

Fed officials had hoped to see a "string" of months  in which a million or more new jobs were added to U.S. payrolls, helping  the country quickly claw back the 8.2 million positions still missing  from before the pandemic.

St. Louis Fed president James Bullard  earlier this week however called that figure "hyped up," and said a  "more realistic" expectation was for perhaps half a million jobs a  month.

The comments highlight a growing dilemma at the Fed as it  wrestles over how long to keep emergency levels of economic support in  place as the pandemic ebbs and the economy revs up for what may be the  strongest year of economic growth since the early 1980s.

Philadelphia  Fed President Patrick Harker on Friday became the second Fed official,  along with Kaplan, to urge a faster start to talks over when and how  quickly to reduce the central bank's $120 billion in monthly bond  purchases.

"It is something that, in my mind, we should start to  have a conversation about sooner rather than later," Harker said at a  virtual event organized by the Washington Post.

Atlanta Fed president Raphael Bostic and Richmond Fed president  Thomas Barkin, speaking at the same event with Kaplan, both stuck to  their positions that more hiring needs to take place before they'd be  ready to discuss a bond purchase "taper."

"Right now we are not  in a position where that's in play for moves," Bostic said, a view that  is currently a near consensus at the Fed, even as some begin to warn of a  possibly overheating economy.