Press conference exchange between JEFF COX and Fed Chair Jerome Powell:

user: Yes, thank you. Chair, I just want to dig a little bit deeper on employment. We’ve seen what’s been called the great resignation, folks leaving their jobs in record numbers. Is there any feeling there that maybe you’ve been accused of “fighting the last war”—that perhaps the labor dynamics have changed in the post-COVID environment and that full employment may not look like what it looked like before?

assistant: Yes. So, what’s happening is, people are leaving their jobs. They’re quitting their jobs in all-time-high numbers—but, in many cases, going back into employment and getting higher wages. So a lot of the higher wages you’re seeing are for job switchers rather than incumbents. So that’s just, that’s a sign of a really strong labor market, as opposed to people just running off and quitting. There have also been—there are a significant number of retirements, and we’ll just have to see what that means. So, toward the end of the last cycle, which was the longest in our recorded economic history, we did see labor force participation moving up well above what economists estimate was the trend, and part of that was people staying in the labor force or just not retiring at the rates they were expected to retire. So maybe this was just catch-up on that. I am a believer that, over time, you won’t know how far—you won’t know what can happen with labor force participation in advance. You’re just going to have to give it some time, because we saw that over and over again. There are things that we can, where we can say, you know, this is where the limit is. Labor force participation is a much more flexible subject for me, and so I do think we need to be humble about what the limits are of labor force participation. But we expect labor force participation to pick up. We don’t know the pace at which it will do so. So in terms of full employment, as I discussed earlier, I think, at the very beginning of the recovery, the natural thing to do was to look back at labor conditions, labor market conditions in February of 2010, at the end of the longest expansion in our history. There was so much to like about that labor market, a really historically good labor market—never perfect, but a good labor market. We’re in a different world now. This is a—it’s just very different. The pandemic recession was the deepest, and the recovery has been the fastest. And wages didn’t really go down. And, you know, real incomes were more than fully replaced by fiscal policy support. All of this is completely unusual. You know, an economy where inflation was driven by services is now inflation where—all the inflation is in goods, which have had negative inflation for a quarter-century. So you ask about full employment. I think we have to—I’m very open to the thought that it’s going to be an empirical question of where it is located, and we’re just going to learn more and more. I mean, one thing we’ll learn, I think, I hope we’ll learn in the next, in the near term is, once the Delta variant really does continue to decline, what’s going to happen to employment? Are we going to start to see over the winter, you know, significant increases in jobs again? If you look back, the three-, six-, and nine-month average job creation is between 550,000 and 600,000. So if you think of that as a stronger—you don’t have to think back to the million-job months of June and July. You can just think, okay, 550 to 600—if we should get back on that path, then we would be making good progress, and we like to see that, of course. So we’ll know so much more. And, believe me, we understand. It’s a different world in so many ways. And we’re very open to that.