Powell On Max Employment Assessment

Q: Re max employment assessment, do you have a framework for making that judgment that's independent of what inflation is doing?

• A: We don't actually define maximum employment... We think about maximum employment as looking at a broad range of things. Unlike inflation where you can have a number, with maximum employment, you can be in a situation, hypothetically, where the unemployment rate is low but there are many people out of the labor force and will come back in. So, you wouldn't really be at maximum employment.
• By many measures, we are at a very tight labor market - quits and job openings and wages, many of them are signaling a tight labor market. The issue is, how persistent is that. You have people holding themselves out of the labor market because of caretaking needs, or because of fear of Covid or for whatever reason. It's clear there is tremendous demand for workers and wages moving up. It seems like we are set up to go back to higher job creation. That would suggest you are not at maximum employment.
• At the end of the day it's a judgement thing - but it also has been to be a level of employment that is consistent with price stability.