Print
Word
PDF|
This section contains 449 words (approx. 2 pages at 300 words per page) |
|
Payrolls Score Multiple Touchdowns (2006 Report)
Summary: A very solid gain in payroll employment in January, reinforced by upward revisions to November and December, suggest that economic growth remains healthy. The job gains were corroborated by a plunge in the unemployment rate to a cyclical low of 4.7% and a 0.4% rise in wage rates, bringing the year over year increase to 3.3%. Clearly, the labor market is doing well. A strong labor market affects household income directly, giving consumers the wherewithal to finance spending. These data give the Fed little reason to think that their efforts to contain growth to a non-inflationary pace have borne any fruit quite yet. Therefore, investors have good reason to expect more rate hikes.
A very solid gain in payroll employment in January, reinforced by upward revisions to November and December, suggest that economic growth remains healthy. The job gains were corroborated by a plunge in the unemployment rate to a cyclical low of 4.7% and a 0.4% rise in wage rates, bringing the year over year increase to 3.3%. Clearly, the labor market is doing well. A strong labor market affects household income directly, giving consumers the wherewithal to finance spending. These data give the Fed little reason to think that their efforts to contain growth to a non-inflationary pace have borne any fruit quite yet. Therefore, investors have good reason to expect more rate hikes.
A slowdown in growth will occur when monetary policy turns somewhat restrictive, thereby raising the cost of capital sufficiently to deter spending, at least at the margin. That simply hasn't occurred yet, even though the Fed has hiked...
|
This section contains 449 words (approx. 2 pages at 300 words per page) |
|
