And, it is the wrong time for new jobs programs --- risk of inflation is too high

The United States Federal Reserve has a  from Congress: maintain price stability and pursue maximum employment. A  announced in August 2020 by Federal Reserve Chair Jerome Powell called for a more inclusive employment mandate aimed at boosting employment for workers in low- and moderate-income communities, often people of color. This is in keeping with the Fed’s response to the pandemic’s effect on the economy, which has used aggressive bond purchases and other tools to keep the labor market as tight as possible, thereby preventing a landslide into recession-level unemployment.

However, as fears of inflation increase, we are at a possible inflection point regarding the future of this strategy. In August 2021  increased 5.3 percent before seasonal adjustment year over year. June 2021 saw the biggest , 5.4 percent, since August 2008, which translated into negative real wages for workers. This rise in inflation likely reflects temporary supply chain disruptions and the uneven reopening of sectors such as hospitality due to the ongoing pandemic. But inflation could linger longer than initially expected and even potentially increase. And while the Fed publicly maintains that current inflation is not a pressing concern (perhaps to not spook Wall Street), private doubts might lead the Fed to reconsider its approach.

One foreshadowing of a potential change in policy occurred in  held after the most recent Fed meeting on September 22. During the conference, Chairman Powell noted that in his view, and that of many on the committee, there has been enough progress in employment metrics that the Fed will likely soon consider tapering off its bond purchases, thereby cooling inflation and producing a slacker labor market.