With jobs and the economy performing pretty much as analysts had predicted — it’s clear that interest rates will likely be raised by a quarter of a percentage point on December 16th. This will be the first major increase in the past 7 years.
Fed officials say they are looking at data to determine their policy, and the latest data “backs up the idea that the United States economy is fundamentally in pretty decent shape”, reports the NY Times. As jobs continue to grow and unemployment stays relatively low, employers are more likely to increase salaries.
But now this has us asking: When will the next interest rate increases come?
Faced with inevitable changes in the interest rate, now we wonder how rapidly they will continue to change. Or how slowly.
Forecasters think two more interest rate increases next year could bring short-term rates to about 0.75% in the next 12 months.
The economy is still not entirely recovered, with millions still having left the labor force and never returned. The percentage of the population working was unchanged at 59.3%, which is only a tenth of a percentage point higher than it was a year ago.
Average hourly earnings rose 0.2%, which brings us only to 2.3% total over the last year — not really an indicator of strong inflation.
The unemployment rate is low, still at 5%. “But in terms of the day-to-day experience of American workers and potential workers, the new numbers point to how much repair there is left to take place,” reports Neil Irwin in his post “The Economy is Growing, but Not Fixed Yet”.