MNI BRIEF: Fed Report to Congress Stresses Slack in Labor Mkt

The Federal Reserve said in a semiannual report to Congress released Friday that it sees "much slack" remaining in the labor market but improvements in labor force participation should arrive in coming months.

"Many of the factors constraining labor force participation should gradually abate in the coming months, and, as they do, the overall participation rate should rise and the demographic disparities in labor force participation that widened during the pandemic will likely continue to narrow," the report said. The report cited fears of the virus, expanded jobless benefits, caregiving responsibilities, and retirements as factors constraining the labor or recovery.

The report also said "in coming meetings" the FOMC will assess the economy's path relative to the Fed's substantial further progress benchmark. MNI has previously reported that if wider measures of the labor market don't show gains, such as the employment-to-population ratio, then the Fed could delay a reduction in its QE program.