job numbers from the BLS this morning show total nonfarm payroll employment increased by 211,000 in November.
The unemployment rate was unchanged at 5.0 percent.
Job gains occurred in construction, professional and technical services, and health care. Mining and information lost jobs.
The numbers have been widely anticipated because they are the last before the Ides of December FOMC meeting.
Fed Chair Janet Yellen made clear yesterday in her testimony before the Joint Economic Committee of the Congress that the Fed is ready to raise the zero-bound Federal Funds rate that has been at the zero-bound level since December 2008. The only major concern is lackluster economies in the rest of the world.
Comment
The Fed has a dual mandate (besides the basic one of ensuring stability in financial markets) – its traditional 1913 mandate to preserve the value of the dollar by reining in lending during periods of speculation and therefore inflation, plus its 1946 mandate to ensure full employment.
Interest-rate doves like Paul Krugman and Brad DeLong argue that since the United States has no inflationary pressure, interest rates should not be raised. If inflation is below the 2 percent Fed inflation target, leave rates alone. While unemployment is low, the employment/population ratio is also low and economic growth has been slow. Why is anyone is thinking of raising interest rates? They are afraid raising rates will kill the economy.
One answer is that the zero-bound rate is an unnatural one, giving no flexibility on the stimulus side. The Fed wants to be able to respond to economic developments in either direction. So long as it is at the zero bound, it is powerless to do much to stimulate demand, notwithstanding the QE initiatives.
Friday, December 4, 2015
FOMC | Job Numbers Mean EZ Decision (Comment)
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I write about the biographical and economic threads in history. Special interests include symbols of family, such as coats of arms, and the behavior of families in a crisis.
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