Unemployment has fallen down to 5.0% in October and jobs increased by 268,000. This is a strong sign for the U.S. economy. Also the average hourly wage rose by 9 cents up to $25.20. The FOMC is looking for the economy to move towards full employment and inflation to be at 2% before they decide to raise interest rates. Interest rates haven't been risen since 2006. With continued strong job growth for the U.S. economy by December, Janet Yellen has signaled that the Fed may finally raise interest rates. The President of the Fed in Chicago stated that his two most important criteria for increasing the interest rates are strong wage growth and inflation moving to 2%. The meeting that will decide if interest rates will increase is in mid-December. So wage growth, inflation, and job growth from November will also be taken into account for the big decision. If they keep increasing like they did in October, we might finally see a increase in interest rates.
http://www.wsj.com/articles/u-s-employers-add-271-000-jobs-1446816737
2 comments:
My prediction is that the Fed will raise rates before inflation hits 2%. This is because inflation has not been at 2% in a very long time, and getting it this high will take a long time. Unless the Fed starts pumping money in to the economy, it is going to be quite some time before inflation rises. This is a situation where living under a command economy would be interesting. This is because the CPB could just raise prices, and create inflation.
Unemployment being this low is a good sign for the economy. Switching topics just a little bit, I cannot see it being this low if the minimum wage is $15 in the near future. Firms will have less money to hire employees, and it would put a lot of people out of work. In reality, working on minimum wage isn't ideal for living, so I can see where people come from. But you're gonna have to be pretty lucky to get a job if the minimum wage skyrockets like this. It would inflate other jobs too.
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