Friday, December 4, 2015

"211,000 New U.S. Jobs All But Guarantees a Fed Hike"

The above headline comes via MarketWatch.

Net new jobs in the United States increased  in November by 211,000 jobs, according to the Labor Department.

This is the last significant piece of data between now and the December 15-16 FOMC monetary policy meeting. Unless there is some type of major market moving even that spooks Fed members, the Fed will raise the rates they control, at the policy meeting.

Those of you who still think the Fed is bluffing can continue to post your opposing views in the comments section.



  1. Interesting how most of the new jobs come from low paying sectors (retail, education & health and leisure & hospitality) while the high paying job sectors were low growth or lost jobs. 2016 should be an interesting year.

    1. Education and health care jobs are not low paying jobs. Construction jobs, professional and business services are not low paying either.

    2. But those jobs are what we expect to see from fed and government policies. Education is largely tax funded, health care is a crony sector, construction when it is not a government project these days it is usually somewhere close to a fed money tap. With goods producing down the need for business and professional services are financial ones. We may be seeing bubbles being blown in certain sectors. Shouldn't manufacturing/mining/logging rise with construction when economic growth is real and natural?

      But that's not the point. The point is that the fed wants to find a reason to do what it wants to do. That chart will do well enough.

  2. So, Robert, do you believe that the rate hike will pop the bubbles in this economy or not? If you believe that the bubbles will pop don't you think that the people at the Fed might understand that as well?

    I would think, from the Fed's political perspective, the safest course would be not to raise rates. After all, don't they keep telling us that there is no price inflation happening? Why would the Fed be eager to raise rates?

    1. Right.

      If RW thinks higher rates will not traumatize an economy with a labor structure, capital structure, and cash flows adjusted to and dependent on the embedded subsidy and distorted signals of artificially low rates, and RW thinks higher rates will not start to rupture artificially levered-up asset price bubbles, then RW implicitly endorses the effectiveness of artificially lowered interest rates at creating real and lasting improvements in jobs, productivity, and asset prices.

      In other words, if RW's prediction is correct that the Fed can allow rates to rise and the economy will not turn for the worse, then Keynesianism is correct!

    2. @sonepatchworth

      Very well said. I would like to hear RW's response to that...