Surprising boost in employment as 187,000 jobs added in August.
The Economy Continues to Thrive with Strong Job Growth
The economy exceeded expectations in August by adding an impressive 187,000 jobs. This is yet another indication that the labor market is still gaining momentum, despite the Federal Reserve’s interest rate hikes.
The headline job growth number in Friday’s employment report from the Bureau of Labor Statistics was in line with predictions. However, it’s worth noting that the unemployment rate did rise to 3.8%, which is still historically low.
What’s particularly interesting is that the Federal Reserve’s continuous efforts to increase interest rates have not had as significant an impact on the broader economy as anticipated. This could potentially increase the likelihood of further rate hikes by the Fed later this year.
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The Federal Reserve has been implementing a historic monetary policy tightening in response to the inflation that has affected households over the past few years. The consumer price index shows that annual inflation has dropped from over 9% in June of last year to just over 3% this June.
According to a report released on Thursday, the consumption expenditures index, which is favored by the Fed, indicates that prices rose at a 3.3% annual rate in July.
Despite the rate hikes, the country’s gross domestic product growth has remained surprisingly strong. The government’s GDP estimates reveal a 2.1% annual growth rate in the second quarter of this year, following a 2% growth in the first quarter.
However, there are some negative consequences of the interest rate hikes that are impacting consumers. Higher interest rates have made it more challenging for individuals to pay off credit card debt and have made housing less affordable for many families.
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As of Thursday, the average rate on a 30-year fixed-rate mortgage was just over 7%, according to Mortgage News Daily. This is a slight decrease from the 7.42% recorded last week, which marked the highest mortgage rates since 2000.
The Biden administration has launched a political campaign called ”Bidenomics” to highlight the positive aspects of the economy and associate the president with the good news. The goal is to persuade voters to reelect Biden in 2024 by showcasing an improved economy. However, this desired outcome has not yet materialized.
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