Press conference exchange between RICH MILLER and Fed Chair Jerome Powell:

user: Thank you—sorry. Thanks for taking the question, Mr. Chairman. You mentioned earlier we’re not seeking a weaker labor market, I think you, you said. Can you talk a little bit more about that? Do you—do you think the labor market now is back to quote, unquote, “normal” and that the—we can achieve the inflation target without wage gains coming back down to what they were pre-pandemic? Even with today’s ECI levels, they were still above those pre-pandemic levels.

assistant: I, I think the labor market by many measures is at or nearing normal—but not totally back to normal. And you pointed to one or more of them. So I think, you know, job openings are not quite back to where they were. Wages—wage increases, rather, are not quite back to where they—to where they would need to be in the longer run. I, I would look at it this way, though. The, the economy is broadly normalizing, and so is the labor market. And that process will probably take some time. So wage setting is something that happens—it’s, it’s—you know, probably will take a couple of years to get all the way back. And that’s okay. That’s okay. But we do see—you saw today’s ECI reading—you know, the evidence is that, that wage increases are still at a healthy level—very healthy level—but they’re gradually moving back to levels that would be more associated—given, given assumptions about productivity, are more typically associated with 2 percent inflation. It’s, it’s an ongoing process—a healthy one— and, and, you know, I think we’re, we’re moving in the right direction.

user: So that process can continue without a weakening of the labor market, basically, you’re saying?

assistant: I think the, the labor market is—it—I don’t know if I’d—it’s rebalancing. Clearly, that the—there was a fairly severe imbalance between demand for workers and supply at the beginning of the pandemic. So we lost several million workers at the beginning of the pandemic from people dropping out of the labor force. And then when the economy reopened—you remember 2021—you had a severe labor shortage, and it was just—it was everywhere—panic on the part of businesses—couldn’t, couldn’t find people. So, what’s happened is—we expected labor—the labor supply—labor market to come back quickly, and it didn’t. And 2022 was a disappointing year, and, you know, we were thinking, “Well, maybe we won’t get it back.” And then 2023, we did, as you know—so labor force participation came back strongly in ’23, and so did immigration. Immigration came to a halt during the pandemic. So—and so those two forces have significantly lowered the temperature in the labor market to what is still a very strong labor market. It’s still a good labor market for wages and for finding a job, but it’s getting back into balance, and that’s what we want to see. And, you know, one great way to look at that is what’s happening with, with wage increases. And you see it now across the, the major things that we—that we track. It isn’t every quarter, but, overall, there’s a clear trend—still at high levels, but back down to where—what would be consistent with, with where we were before the pandemic and with 2 percent inflation.