Powell Says Economy a Long Way From Maximum Employment

Q: How do you reconcile unemployment claims and BLS payrolls numbers? How do you reconcile that and what is the "average" in labor market conditions?

A: The overall picture is that the labor market has been recovering but it's a long way from maximum unemployment. Re claims, looking at :the number of claims, the quantity of claims, the fact that pandemic assistance claims are new. The actual counting of the claims is volatile and it's very difficult to take much signal about the particular level. What you've seen is that the level of initial claims has declined very sharply from the very high levels of March and April and is now at a lower level,and continues to be either flat or gradually declining. That's good.

We say unemployment is 8.4% but if you count those people who are misidentified as employed etc...the level of unemployment is probably 3 percent higher. On the other hand, by that metric, the unemployment rate would have been in the 20s in April.

Follow up Q - is the Fed trying to get back to 3.5% or even lower?

A: "Yes. Absolutely. I can't be precise about particular number but let me just say, it's not a magic number. No one would say that number is the touchstone, or that is maximum employment." 3.5% showed a tight job market, lots to like about it, particularly in a world with where we didn't see inflation so yes we'd love to get back to that.