Weak job growth in November shouldn’t keep interest rates low, economists say
US job growth slowed in November with just 210,000 new jobs created during the month, falling well below economists’ expectations of 550,000. The unemployment rate also fell by 0.4 percentage points percentage to 4.2%, whichever is later Summary of employment status of the Bureau of Labor Statistics (BLS). Despite a significant drop, economists were optimistic about the employment figures.
âRegardless of the point of view, the job market continues to improve,â said Mike Fratantoni, senior vice president and chief economist of the Mortgage Bankers Association (MBA). “The gain in non-farm payrolls of 210,000 jobs in November was smaller than expected. However, as has been the case several times this year, there is reason to believe that this is downplaying the improvement.”
He added that compared to November 2020, nearly six million more people are employed, noting that “seasonal adjustment factors are less reliable given the volatility during the pandemic.”
With economists still optimistic about the job market in a context of less job creation, it is likely that the Federal Reserve will not be dissuaded from increase interest rates Next year. If you want to take advantage of low interest rates, consider refinancing your mortgage to lower your monthly payment. Visit Credible to find your personalized rate for mortgage refinancing and see how much you could save.
OMICRON VARIANT CONCERNS HIGHER MORTGAGE RATES, BUT STILL REMAINS AT LOWEST RECORDS
Inflation rises as the unemployment rate falls
The Federal Reserve is already talking about accelerate its economic recovery by reducing allow interest rates to be raised from the second quarter of 2022, if necessary to fight inflation.
“As inflation continues to rise, Federal Reserve Chairman Jerome Powell has indicated his willingness to end the large-scale asset purchase program sooner than expected, âsaid Dawit Kebede, Senior Economist at Credit Union National Association (CUNA). , a drop in the unemployment rate is a step in the right direction to accelerate these changes. “
However, fears about the omicron variant of the coronavirus could still disrupt the economic recovery, even as the economy adds more jobs and a higher activity rate.
âLabor force participation increased for the first time in several months, showing a return to work for some who have withdrawn due to fears of COVID or lack of childcare,â Kebede said. “The emergence of the new Omicron variant, which is more transmissible than Delta, could derail progress in the labor market and exacerbate supply chain disruptions if cases continue to rise.”
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JEROME POWELL SIGNALS THE FED COULD ACCELERATE DEVELOPMENT TOWARDS THE BOND PURCHASING PROGRAM
Biden says job prospects are good
Rather than focusing on the missed expectations in the November jobs report, President Joe Biden spoke about the drop in the unemployment rate, which has reached a level that experts say will not happen for some time to come. years.
âToday we have incredible news that our unemployment rate has fallen to 4.2% – a level experts didn’t expect us to reach until 2024,â Biden said on Twitter Friday. “We created 588,000 jobs per month on average this year – a record. America is back to work and our employment recovery is strong.”
An expert said that as the US economy moves towards pre-pandemic levels, it is difficult to use the most recent jobs report as an indicator of the strength of the labor market, saying that its data was saved before several key changes.
“The usefulness of the jobs report as an indicator of the short-term economic outlook is further diminished by the fact that the reference week for the payroll survey was earlier in November, before the recent change in the Federal Reserve’s forward-looking guidance on inflation and the emergence of the Omicron variant as a matter of concern for the continued increase in labor force participation, âsaid Mark Palim, deputy chief economist of Fannie Mae.
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