Economic Insights — By the time the Fed raised interest rates in March 2022, employment, which had been hit hard by COVID, had bounced back for most groups, but there were two notable exceptions.
The U.S. labor market quickly recovered from the COVID shock, but the recovery was uneven. For some groups, such as prime-age men and college-educated, prime-age women, the recovery is almost complete, and their employment is back at its prepandemic level. The employment rate of prime-age women without a college degree, however, is still low relative to before the pandemic. Older people also suffered more in this recession. A central bank raises interest rates to dampen economic demand and thus relieve inflationary pressure, but higher rates might also slow the growth of employment in the labor market, especially for these two groups, whose employment had not yet fully recovered as of March 2022.
This article appeared in the Third & Fourth Quarters 2022 issue of Economic Insights. Download and read the full issue.
