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Fed’s Daly says labor market not tight, jobs recovery underway

Despite complaints from U.S. employers that workers are hard to find, there are almost 10 million people who are unemployed and more sitting on the sidelines of the labor market, said San Francisco Federal Reserve President Mary Daly, who expects many or most of them to return to work as the economy recovers.

“Myriad factors are tempering labor supply at the moment – the need to care for children, fears of COVID, generous unemployment benefits,” Daly said in a blog post on Tuesday. “But there is no reason to expect those to be permanent or even highly persistent features of the labor market.”

Daly made her remarks after two of the U.S. central bank’s more hawkish policymakers – Fed Governor Christopher Waller and St. Louis Fed President James Bullard – said in recent days that they believed the job market recovery is nearing completion, clearing the way for the Fed to begin reducing its support for the economy in a matter of months.

Daly didn’t address the Fed’s potential taper of its bond-purchasing program in her remarks, which were released not in the usual format of prepared remarks for a scheduled speech but rather as a two-page blog post.

But in saying the jobs recovery among workers aged 25 to 54 is “underway” and harking back to the pre-pandemic expansion when more people returned to work than many policymakers anticipated, Daly’s comments serve as an argument for continued Fed support rather than a rush to remove it.
Source: Reuters (Reporting by Ann Saphir; Editing by Paul Simao)

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