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Discouraged American workers are showing signs of returning to the labor market, a signal that the Federal Reserve could hold off on interest rate hikes this year and that President Donald Trump may have something more to boast about as he heads toward his re-election campaign.
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“Those who thought that the job market was at full capacity a year or more ago, and a lot of prominent people thought that, I think the evidence is they were wrong,” Jared Bernstein, former chief economist to Vice President Joe Biden, said on the, which examines the recent rise in the labor force participation rate to 63.1 percent last month.
“There is more room to run in the American labor market than lots of economic people thought,” said Bernstein, now a senior fellow at the Center on Budget and Policy Priorities.
In December, 419,000 workers reentered the labor market, lured by the large number of openings and wages that are now growing at over 3 percent per year. Some did not find work, which pushed the jobless rate from 3.7 percent to 3.9 percent.
But several months of increases in the size of the labor force suggest the economy is not yet at what economists call “full employment.” That means the Fed could wait a bit longer before worrying that employers will have to jack up wages considerably faster to attract existing workers, something that could cause an unwelcome spike in inflation.
Pat St. Claire, a journalist in Atlanta, is among those who had given up on finding a full-time job after getting laid off by CNN in 2013. “It was really discouraging, quite honestly,” St. Claire said on the podcast. “I was applying to maybe two jobs a week or so, maybe two or three jobs, because I would really take my time and try to craft letters, and nothing, I got no bites at all.”
St. Claire began drawing Social Security last year and figured her career was over. But she decided to try again and landed a part-time job at the radio station WABE in Atlanta that eventually led to a full-time editing job in December.
“It was a sense of relief for sure,” she said. “It was kind of mixed feelings though, because it felt like it took a long time and there are so many highs and lows.”