Amid tough job market for young Americans, Fed Chair Powell tells students not to despair

Federal Reserve Chairman Jerome Powell has a message for young Americans looking for work in a tough job market: Don’t be discouraged, even though job creation remains weak and the threat of artificial intelligence remains.

The chairman of the Fed, who gave comments on Monday to an undergraduate economics class at Harvard University, talked a lot during his one-hour appearance, including the ability of the financial system to deal with future problems. He also talked about inflation during the war in Iran, saying that long-term prospects are still there.

Powell is set to step down from his post in May, when he will be replaced by Kevin Warshformer Fed official whom President Trump appointed to the post in January. Meanwhile, the Fed is grappling with economic data that shows inflation is still above the central bank’s annual target of 2%, while rising oil prices are raising costs at the gas pump and may be weighing on the economy.

“Great Opportunities”

Perhaps his strongest message was for the young people in the room, who could soon find themselves job hunting in a market damaged by slow growth. With a stable labor market, young Americans in particular are struggling to find work.

“There’s no denying that it’s a tough time to get into the labor market, but it can take patience and all that, but in the long run, this economy is going to give you good opportunities,” Powell said Monday.

The unemployment rate for 20- to 24-year-olds stands at 7.4%, after exceeding 9% last fall, Labor Department data show. That’s higher than the overall unemployment rate, it is reached 4.4% in February. Hiring hasn’t been easy either, with employers adding 181,000 jobs last year.

Powell acknowledged these challenges but spoke plainly, telling the students in the room that they are part of a historically strong economy that will create opportunities for them in the long run.

“The American economy, compared to other major market-based economies around the world, is very strong and productive,” he said.

Inflationary expectations

Powell also talked about inflation during the war in Iran, saying that long-term prospects are still there.

“The trend is to look at any kind of supply shock,” he said, adding, “But the bottom line is that you have to monitor inflation expectations carefully, because you can have a series of these supply shocks.”

Powell added that there isn’t much Fed policymakers can do since energy shocks “tend to come and go quickly” and monetary policy is long-term. But a series of earthquakes, however, can affect.

“You have to watch inflation expectations very carefully because you can have a series of big supply shocks and that can lead, you know, the general public, businesses, price setters, households … to start expecting higher inflation over time. Why wouldn’t that be the case?” Powell said.

Some economists have pointed out that rising oil prices can stimulate growth by causing higher prices for transportation, fertilizer and other goods and services that rely on fossil fuels.

Brent crude, an international benchmark, rose to $115 a barrel on Monday before returning to $107.95, according to data from Oilprice.com and FactSet. West Texas Intermediate, the US benchmark, rose 2% to $101.70. Before the Iran war, both were trading around $70 a barrel.

The impact of artificial intelligence

Powell was also positive about artificial intelligence, which is poised to transform the workforce. Last year, Dario Amodei, CEO of AI company Anthropic, said he thought technology could eliminate half of all human jobs.

Powell noted that companies are looking for ways to automate jobs while looking to cut costs. But he also said that he believes that the large range of languages ​​will make workers more efficient, pointing to past examples of how other technologies, such as the loom, changed the production of goods and ultimately increased the productivity of workers.

“In any case, it is doomed to raise productive living standards as long as society continues to produce people with the skills and abilities to benefit from that technology,” Powell said.

Young workers stand to benefit if they embrace technology, he added.

“I think you’re at a point where you need to invest the time to make the most of these new technologies, and that should help you,” he said.