Posted on 10/03/2014 6:09:50 AM PDT by mykroar
The U.S. economy added 248,000 jobs in September as labor markets rediscovered the momentum gained earlier this year. The headline unemployment rate dropped unexpectedly to 5.9% from 6.1%
The better-than-expected figures are certain to rekindle the debate over the timing and trajectory of interest rate hikes by the Federal Reserve, as the positive report will have many economists looking for rates to move higher sooner rather than later.
In August the economy generated just 142,000 new jobs, well below expectations on weakness in major sectors including manufacturing, retail and transportation. That number was revised upward to 180,000 on Friday, according to figures released by the U.S. Labor Department.
As has been the case in recent months, economists are looking well beyond the headline unemployment rate and the number of jobs created, to other statistics like hourly wages that offer a broader gauge of the health of labor markets.
The Labor Department said average hourly earnings for all employees on private nonfarm payrolls fell by 1 cent to $24.53 in September. Over the past 12 months, average hourly earnings have risen by 2%.
Economists believe wage growth will be one of the most important indicators to watch over the next few months as the Federal Reserve determines when and how to raise interest rates and otherwise wind down the massive stimulus policies initiated in the wake of the 2008 financial crisis.
Wage growth has risen just 2% year-over-year, a slight improvement over previous months when the rate hovered around 1.5%, but still well below the 3%-3.5% rate the Fed views as necessary to keep inflation at its desired 2% target rate.
Fed Chair Janet Yellen has frequently highlighted wage growth as an indicator the Fed is watching for signs labor markets are strengthening beyond the declining headline unemployment rate. Repeatedly, Yellen cited stagnant wage growth as a sign of “slack” in the labor market that needs to tighten before the central bank will raise interest rates.
But there’s a downside to rapid wage growth: Inflationary pressure. When wages rise too quickly it can lead to runaway inflation, and eventually cut into corporate profits.
Indeed, wage growth and other inflationary indicators are at the heart of a heated debate within the Fed over the timing and trajectory of rate hikes. The consensus among Fed economists is that hikes should and will occur in mid-2015, soon enough to head off runaway inflation but still kept low long enough to continue providing stimulus to the fragile economic recovery.
When rates do move higher it will raise borrowing costs, making it more expensive for consumers to get a mortgage or a car loan, or for small businesses to get a loan for expansion. So-called inflation ‘doves’ at the Fed fear raising borrowing costs could stall the recovery.
Meanwhile, an increasingly vocal group of Fed inflation ‘hawks’ has called for rates to move higher sooner rather than later, possibly as early as the first quarter of 2015 to eliminate any likelihood of an over-heated economy. They argue that keeping rates low will invite runaway inflation and lead to asset bubbles.
Some influential economists believe wages will likely get a six-month window during which higher wages will be welcomed as a contribution to the economic recovery. After that, economists will start to worry about whether higher wages are fueling an overheated economy.
That's a hell of a revision. And look - 5.9% just in time for the election!
http://data.bls.gov/timeseries/LNS11300000
All we are doing is washing our unemployment out of our labor force participation rate.
All we are doing, is buying way too much stuff, imported from China.
It’s the red states with GOP governors that are doing it.
no, it’s the number crunchers at the Labor department that are doing it.
I would love for the job market to suddenly take off and get busy, but I know nobody out there who believes this is happening.
I'm not talking about number crunchers and spin doctors in the employ of government, I'm talking about people who are actually looking for a job.
Meanwhile, gold’s dipping under $1200 and silver’s dancing around $17.
Your charts show the appalling situation of people not in the labor force. Even that doesn’t tell the whole story. I believe the gov numbers (sort of), but they don’t tell us how many of those jobs are at or near full time.
Since 2008, the part-time jobs are almost two to one versus full-time.
Mmm ... I wonder what the underemployment rate is.
Ah! I remember 2008 and the previous years. We were told that the economy was the worst since the Great Depression. And now we’re supposed to celebrate the same statistics?
The liberal mind is a wasteland.
I was traveling in the western Midwest recently. In areas where I spoke to people they said things were doing very well.
What mind? If a Liberal had a mind, they would not be a Liberal. Liberals are slaves and robots. They do, say, and act as instructed by their masters.
Yeah, and care-of Fox News.
I heard this report on the radio c/o Fox News Radio, whose reports are typically glowing in support of propaganda for the masses.
I likened continued broadcasts of Fox Radio News Reports to facilitating self-gratification and suggested the picture might only be complete with a broadcast describing NFL cheerleaders' uniforms...
Any economic numbers issued by this administration are at best distortions of the actual numbers or outright fabrications. No amount of rosy economic numbers can cover what millions of Americans already know...this economy is the worst since the great depression.
.....and Ebola isn’t an airborne transmission disease...........
Unexpectedly
Stole it from a commenter at zero hedge.
> Your charts show the appalling situation of people not in the labor force. Even that doesn’t tell the whole story. I believe the gov numbers (sort of), but they don’t tell us how many of those jobs are at or near full time.
I don’t believe the government numbers tell the people what matters most to them - how many people have jobs that they can actually support them living apart from their parents...: x)
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