Federal Reserve Chair Jerome Powell said on Wednesday that job creation in the U.S. has slowed down to essentially zero as the Fed released its latest economic projections, which included slightly higher economic growth than previously projected and little change to the unemployment rate.
Powell said that altogether central bankers see “a degree of stability” in the labor market. “But the thing that I think a good number of people on the committee are concerned about is just the very, very low level of job creation,” Powell said in a press conference following the Fed’s decision to hold interest rates steady.
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“Effectively, there’s zero net job creation in the private sector,” after accounting for revisions over the past six months, Powell said. “But actually, that looks like that’s about what the economy needs, in terms of dealing with very, very low — nonexistent, really — growth in the labor force, which of course we’ve never had in our history.”
While the country might not need as many jobs as it once did, lower labor force participation rates and immigration declines, Powell noted that “labor demand has clearly softened as well.”
While there hasn’t been any major change in the job market since Powell’s last press conference in January 2025, any little optimism found is now in doubt.
The unemployment rate, now at 4.4%, went back up in February as the economy shed 92,000 jobs. December and January’s job gains were revised lower by 69,000, meaning there’s been barely any job growth in three months.
In their new policy statement, Fed officials removed language that noted the “unemployment rate has shown some signs of stabilization,” saying instead that “job gains have remained low, and the unemployment rate has been little changed in recent months.”
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Powell also addressed inflation. “The forecast is that we will be making progress on inflation, not as much as we had hoped, but some progress on inflation.”
He also said that he wouldn’t use the term “stagflation” to describe the U.S. economy. “I always have to point out that that was a 1970s term, at a time when unemployment was in double figures and inflation was really high,” he said. “We actually have unemployment really close to longer-run normal, and we have inflation that’s 1 percentage point above that.”
“I would reserve the term stagflation for a much more serious set of circumstances,” he added.