MNI TRANSCRIPT: Powell on Labor Market Conditions

     WASHINGTON (MNI) - The following is the portion of a transcript from

Federal Reserve Chairman Jerome Powell's press conference after the FOMC meeting

Wednesday:

     Q: I was hoping you could talk a little bit about the labor market. We've

recently seen wages moderating a little bit by some measures, and maybe even

declining a little by others. And as you mentioned at the lower end of the sort

of talent pool, it seems like we are seeing those wages climb up a little bit,

but it doesn't seem to be consistent across the entire sort of average. I was

wondering if you could talk a little bit about whether you guys are noticing any

cracks or how you're think being that.

     A: The labor market conditions to perform well, the labor market continues

to be strong. We see strong job creation. We see low unemployment, and very

importantly we see labor force participation continuing to move up, really

against expectations. If you go back a few years, you will not find a lot of

forecasts suggesting that we could have been at 62.3% overall labor force

participation with the levels of employment to population we're seeing now, let

alone the unemployment level. So I think we've learned quite a lot of good

things about the labor market, good thing suggesting that there is more room to

run. The performance of wages, I think, has to be seen in that context. We saw,

if you go back four or five years, the four or five major wage statistics that

we track, we're running at around 2% and now running around 3%, which is

theoretically about where they might be at full employment. It would consistent

of inflation plus productivity growth. It's a bit surprising that with sustained

levels of historically low unemployment, we haven't seen wages moving up above

that level as we have in other loan expansions and other periods of low

unemployment. So you ask what can be explaining that? You know, one thing can be

the natural rate of unemployment is still lower than we think that the labor

market is not as tight as it would appear just from the 3.5% number, and the

other can be, I think, that as I mentioned the sort of supply side shock or

surprise that we're receiving from higher labor force participation. People are

coming into the labor market and providing more labor supply and that is a great

thing, that's a very healthy thing. We're a country that has low labor force

participation compared to, essentially, all of our advanced economy peers and

it's a very positive thing. Nonetheless, it represents more labor supply and it

may be holding down wages.

--MNI Washington Bureau; +1 202 371 2121; email: brooke.migdon@marketnews.com

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