January 8, 2019
Actually, the data is from 2018, but it is the most significant data thus far released in 2019. On Friday, the jobs numbers showed the addition of 312,000 jobs last month, more than making up for a miss the previous month. In addition, the previous two months’ numbers were revised upward by well over 50,000 jobs. All in all, 2018 was another good year for jobs growth, with more jobs added than the previous year. This strength is reflected in the unemployment rate which finished the year at 3.9%. This is close to the lowest rate in nearly 50 years, with the uptick from 3.7% last month attributed to more Americans entering the work force.
Also important was the release of wage inflation data. Wages were up 0.4% for the month and 3.2% for 2018, higher than expected. The increase in jobs and in wage growth have contributed to the decision of the Federal Reserve Board to raise rates more rapidly in 2018, compared to the previous few years. And we are seeing just how important interest rates are when it comes to the economy and every-day decisions by consumers. Higher rates certainly have contributed to the increased volatility and downtrend in stocks during the latter part of 2018.
The increase in rates is also being cited as a factor with regard to predictions for slower economic growth this year. What is interesting to see is, as the stock market has declined, long-term rates and oil prices have also dropped as well. Thus, we might be seeing an economy which is self-correcting. If a slowdown occurs because of higher rates, that slow down can cause rates to ease in turn. Does that mean the economy will pick up more than expected in 2019? More jobs might be a sign that additional growth is in the cards. Stay tuned….
Source: Origination Pro
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