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Fed’s Harker: “Very Little Slack” Left in Labor Market

For immediate release
Contact: Daneil Mazone, Media Relations, 215-574-7163 or daneil.mazone@phil.frb.org

Philadelphia, PA — The labor market is “more or less at full health,” said Philadelphia Fed President Patrick T. Harker today. He made the remarks during the keynote address at an urban infrastructure conference at Drexel University.

Harker noted the 211,000 jobs created in April and the drop in the unemployment rate to 4.4 percent. “[W]e’re looking at the lowest unemployment rate in a decade. Quits are up, and labor force participation is higher than a year ago, despite demographic trends that are pulling in the other direction. All in all, we’re looking at a labor market more or less at full health, with very little slack.”

He also laid out his projections on the labor market, estimating the unemployment rate could fall as low as 4.2 percent by the end of 2018. Job creation, he said, will likely average “about 200,000 a month for 2017. That pace should ease down to about 100,000 jobs a month by the end of 2019.”

Harker warned against seeing that predicted slowdown as a negative. “In a well-functioning labor market, we don’t need the kind of job growth we’ve seen over the past couple of years. In fact, to sustain a healthy economy, estimates of the ideal number range from about 70,000 to 100,000 a month to keep up with population growth.”

Based on the strength of the economy, Harker said he continues to see “two more rate hikes as appropriate this year.”

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