Federal Reserve Chairman Jerome Powell blamed the migrant crisis for the nation’s growing unemployment after cutting the benchmark interest rate by 0.5 percentage point on Wednesday for the first time since early days of COVID-19.
“If you’re having millions of people come into the labor force, then — and you’re creating 100,000 jobs — you’re going to see unemployment go up,” Powell told reporters, answering a question about the nation’s current monthly job creation.
“So it really depends on what’s the trend underlying the volatility of people coming into the country.”
“We understand there’s been quite an influx across the borders, and that has actually been one of the things that’s allowed the unemployment to rise,” he said, according to the Wall Street Journal.
“And the other thing is just the slower hiring rate, which is something we also watch carefully. So it does depend on what’s happening on the supply side.”
Powell’s comments come after the Fed accelerated its plan to cut interest rates — originally thought to be just 0.25 percentage point — over concerns about rising unemployment and slowing growth in recent months.
The unemployment rate has been steadily creeping upwards over the last year, with a particular spike in the spring, according to figures from the US Department of Labor.
After starting the year at 3.7%, it stood at 4.2% in August.
The US has also been slow to add jobs in recent months, with a disappointing 142,000 added in August that fell short of the projected target by about 20,000 jobs.
And in July there were just 89,000 added – the lowest seen in the US since the pandemic.
The assessment of the labor market took a major blow in August when it was revealed there were 818,000 fewer jobs created between March 2023 and 2024 than had been previously reported.
More than 9 million people have been caught crossing the border into the US since Biden took office in 2021 – which doesn’t include one million more who are believed to have snuck in without detection.
Those migrants have flooded the country from major metropolises on down to small heartland towns, filling many positions otherwise filled by blue collar workers.
The Fed’s decision to cut rates means that the board of governors believes that unemployment now poses a greater risk to the economy than inflation
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