US Unemployment Fall Delights Federal Reserve

Unemployment levels in the US continue to recover following a shift in focus from the Federal Reserve. Nonfarm payroll figures released by the US Bureau of Labor Statistics have shown the country added 1.37 million jobs over August, following an additional 1.76 million in July. The overall unemployment rate also fell sharply to 8.4% from 10.25% last month, whilst average earnings remained relatively flat at 4.7%.

The latest readings come following a major policy shift by the Federal Reserve. Speaking last week, Fed Chair Jerome Powell announced the central bank is willing to allow inflation to exceed its current 2% target without impacting interest rates. “Average inflation targeting” is hoped to help support the new focus of “maximum employment” as a “broad-based and inclusive goal” by the reserve.

Over 40 million Americans lost their jobs between March and April, with less than half of those returning to work. Roughly 27 million people are still receiving some form of unemployment insurance and current predictions estimate a full recovery could take until Q1 2022.

The US dollar strengthened following the announcements but lost ground over August as the coronavirus epidemic continues to hobble the US economy. With over 6 million confirmed cases and nearly 200,000 deaths, the country now accounts for nearly a fifth of the global total.