Fed officials concerned about weakening job market

Federal Reserve officials at their last meeting expressed concerns that the weakening job market might hold back the economic recovery. The minutes covering the Fed’s June 21-22 meeting were released today and show Fed officials expected the economy would pick up in the second half of the year after slowing this spring. But their outlook for both employment and inflation were unusually uncertain, given the sluggish growth and a jump in energy prices this year. At that meeting, the central bank lowered its economic forecast but kept a pledge to leave interest rates at exceptionally low levels for an extended period. “The recent deterioration in labor market conditions was a particular concern … because the prospects for job growth were seen as an important source of uncertainty in the economic outlook,” the minutes read. The economy added 18,000 jobs last month, the fewest in nine months. And the May data were revised downward to show just 25,000 jobs added—fewer than half of what was initially reported. The unemployment rate rose to 9.2%, the highest rate this year. After last month’s meeting, the Fed said in its policy statement that the economy had slowed, in part, because of higher energy prices and supply-chain disruptions caused by the Japan earthquake and tsunami. But at a news conference after the meeting, Fed Chairman Ben Bernanke acknowledged that some of the economy’s problems are more lasting and go beyond temporary shocks. Bernanke is scheduled to give his semiannual economic report to Congress this week.