Press conference exchange between CHRIS RUGABER and Fed Chair Jerome Powell:

user: Great. Thank you, Michelle. Thank you, Chair Powell. Well, I wonder if you could update us. You talked about getting back to full employment, and so could you update how you define that? I mean, you’ve, you know—a few months ago, yourself and other Fed officials talked about getting back to the pre-COVID labor market. There were even hints you might try to do something better than that. Now we heard talk of, as you mentioned, people retiring, and there’s talk of not being able to get back as—all the jobs back because of that and other trends. You did mention the prime-age folks. So can you give us some examples of things you're looking at, specifically, to measure full employment? Will you be looking at prime-age employment population ratio, for example, and, if so, do you need to see it get back to pre-COVID levels to achieve maximum employment, or is there something short of would work? Thank you.

assistant: Thanks. So maximum employment is, it’s a broad—what would we say?—broad-based and inclusive goal that’s not directly measurable and changes over time due to various factors. You can’t specify a specific goal. So it’s taking into account quite a broad range of things, and, of course, employment—levels of employment—and participation are a part of that. But, in addition, there are other measures of what’s going on in the labor market, like wages is a key measure of how tight the labor market is—the level of quits, the amount of job openings, the flows in and out of various states. So we look at so many different things, and you make an overall judgment. Now, the temptation at the beginning of the recovery was to look at the data in February of 2020 and say, well, that’s the goal because we didn’t know any—that’s what we knew. We knew that was achievable in a context of low inflation. I think we’re in a, you know, we’re learning that. We have to be humble about what we know about this economy, which is still very, you know, COVID-affected, by the way. A lot of what we’re seeing in the last 90 days is because of Delta. We were on a path to a very different place. Delta put us on a different path. And we see these things. But, so I think we’re going to have to—ideally, we would have, we would see further development of the labor market in a context where there isn’t another COVID spike, and then we would be able to see, I think, a lot. We would see whether—how does participation react in that world, in that post-COVID world? Right now, people are staying out of the labor market because of caretaking and because of fear of COVID to a significant extent. You know, we thought that schools reopening and elapsing unemployment benefits would produce some additional labor supply. That doesn’t seem to have been the case, interestingly. So I think there’s room for a whole lot of humility here, as we try to think about what maximum employment would be. We’re going to have to see some time post-COVID so that we know—or post-Delta, anyway—to see what is possible. And I think the learning for those of us who lived through the last cycle is that, over time, you can get to places that didn’t look possible. Now, what we also have now, though, is, we have high inflation. So we have a completely different situation now where we have high inflation, and we have to balance that with what’s going on in the employment market. So it’s a complicated situation, and I would say, we will, we hope to achieve significantly greater clarity about where this economy is going and what the characteristics of the post-pandemic economy are over the first half of next year.