That new rate brings joblessness close to what the Fed considers full employment. That’s not much comfort for tens of millions of workers still looking for higher wages and full-time positions.

Was the Jobs Report Good Enough for the Fed to Raise Rates?

Was the Jobs Report Good Enough for the Fed to Raise Rates?

The stronger U.S. economy added 173,000 jobs in August, a weaker showing than expected in Friday’s much-anticipated unemployment report. That could make the Federal Reserve delay its expected increase in interest rates when policy makers meet in two weeks.

But, then again, maybe not. A closer look at the jobs report reveals some positives, which makes the stock market jittery over the prospect of higher borrowing costs.

The latest Labor Department data found that hiring in August was well below the 220,000-job gain that most economists had expected. Meanwhile, the unemployment rate fell to 5.1 percent from 5.3 percent, the lowest since early 2008.

That new rate brings joblessness close to what the Fed considers full employment. That’s not much comfort for tens of millions of workers still looking for higher wages and full-time positions.

However, average hourly earnings increased higher than most expected, by 0.3 percent in August. Moreover, payroll gains for June and July were revised upward by 44,000.

Friday’s report does not rule out a September rate increase, but it does bolster the sentiment of keeping rates at “near zero,” a move that likely carries little risk and allows Fed policy makers, and the markets, to gradually accept a possible raise in rates as late as December.

“The latest jobs data will leave everyone maintaining their position on the Fed,” Steven Ricchiuto, chief economist at Mizuho Securities USA, told the New York Times. “Not the decisive data the Street wanted.”

Fed officials have repeatedly indicated that they plan to soon begin raising short-term interest rates from near zero, a move that would have ripple effects for widely issued financial products, including mortgages, personal loans, auto loans and credit cards.

 

 

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