by Terresa Monroe-Hamilton | September 17, 2015 2:35 pm
This is all one big, massive lie. First off, the low unemployment rate is a crock. It virtually means nothing anymore as it has been manipulated for propagandic reasons and for political gain. I would wager that almost 30% of America is now unemployed and those numbers look so low because millions have dropped out of the workforce. They are also counting part time jobs as full time jobs. There is no recovery, regardless of what these people spout. America is not doing fine and it is getting worse. As far as inflation goes, have any of these people been to the store recently? Do they even watch the show? Everything is massively up and getting more expensive by the day. Even those who are employed full time are having a hard time keeping up. Just more nonsense from the Fed and the elitists. Another day in America.
From USA Today:
Citing global economic weakness and financial market turmoil, the Federal Reserve agreed Thursday to keep its benchmark interest rate near zero despite the rapidly improving U.S. labor market.
But Fed policymakers’ forecast indicates they still expect to bump up the federal funds rate this year for the first time in nearly a decade, with meetings scheduled for October and December. Their projections, however, show they expect to raise it even more gradually over the long-term than they previously signaled.
Richmond Fed chief Jeffrey Lacker was the lone dissenter.
The decision capped the most dramatic run-up to a Fed meeting in recent memory, with economists split on whether the central bank would raise its key rate, which has been near zero since the 2008 financial crisis and affects borrowing costs for consumers and businesses across the economy.
In a statement after a two-day meeting, the Fed said, “Recent global economic and financial developments may restrain economic activity somewhat and are likely to put further downward pressure on inflation in the near-term.”
Fed policymakers now expect just one rate hike this year that would push the funds rate to 0.375% from the current 0.125%, according to their median forecast. They also expect a slower rise, with the benchmark rate increasing to 1.375% by the end of 2016 and 2.625% by the end of 2017, down from its previous estimates of 1.65% and 2.875%, respectively. The Fed also now expects its longer run normal rate to be 3.5%, below its previous 3.75% forecast.
The central bank said “the labor market continued to improve, with solid job gains and declining unemployment.” It said consumer spending and business investment have advanced moderately while the housing market “has improved further.” But amid the overseas troubles, it said exports have been “soft.”
With the U.S. economy rebounding more strongly in the second quarter after a slowdown early in the year, the Fed raised its median forecast for economic growth this year to 2.1% from 1.9% in June. But after the recent global and market troubles, it lowered its projection for 2016 to 2.3% from 2.5% in June.
And with the 5.1% unemployment rate already below the Fed’s previous year-end forecast, it now expects the jobless rate to be 5% by the end of 2015, down from its June estimate of 5.3%.It expects unemployment to fall to 4.8% by the end of 2016, below its June forecast 5.1%.
Yet the central bank also expects a more modest rise in inflation, providing it more leeway to nudge up rates gently. It slightly lowered its inflation forecast to 1.7% in 2016 and 1.9% in 2017, leaving it below its 2% annual target even in two years.
Supporting the case for a Fed move is a 5.1% unemployment rate that’s already at the central bank’s long-run target, average monthly job gains of 212,000 this year and healthy economic growth of 3.7% at an annual rate in the second quarter.
Waiting until later in the year or early 2016 might force the Fed to hoist rates more rapidly when currently meager inflation eventually heats up, a move that could destabilize markets.
But recent news of China’s economic slowdown, and the resulting turmoil in global and U.S. stocks, prompted Fed officials to temper expectations for a rate hike this week. New York Fed President William Dudley said last month the case for an imminent move had become “less compelling.”
Investors were placing just 23% odds on the Fed increasing rates this week, according to the futures market.
The Fed likely wants to assess how the recent U.S. market selloff affects the economy and if the volatility reflects more weakness abroad than economic reports indicate, Barclays Capital said before the meeting. While U.S. exports to China comprise less than 1% of the nation’s gross domestic product, Chinese trade with other countries could have stronger ripple effects on the economy.
Fed officials are also hesitant to further roil already fragile markets, according to Barclays. And they’ve said the risk of moving prematurely and derailing the six-year-old recovery outweighs the hazards of acting late and having to hike rates more sharply to keep pace with inflation.
For now, at least, annual inflation remains well below the Fed’s 2% target. The Labor Department said this week its consumer price index fell 0.1% in August because of tumbling gasoline prices. And while the Fed expects oil and gas prices to rebound, a measure of inflation that excludes food and energy costs and is more closely watched by the Fed edged up just 0.1%, at least partly because the strong dollar is holding down import prices for consumers.
Fed Chair Janet Yellen has said she doesn’t need to see inflation accelerate to raise rates, but must be confident it will drift toward the Fed’s 2% target over the medium term. Some economists say the 5.1% unemployment rate already heralds a coming surge in wages and prices as employers compete for fewer available workers.
But annual pay growth has been stuck near a sluggish 2% pace, possibly reflecting an excess labor supply that includes part-time workers who prefer full-time jobs and discouraged Americans resuming job searches after years on the sidelines. If that’s the case, the Fed may want to keep rates low longer to stimulate the economy so more of those workers can find full-time jobs.
Before the release of the Fed’s statement to reporters, a coalition of worker advocacy groups called Fed Up gathered outside holding signs such as, “Whose recovery?” and chanting, “Don’t raise the interest rates!”
“The Fed should not make a decision to slow down the economy without hearing from the people it will affect,” said Ady Barkan, the head of the group.
The Fed probably felt they had no choice in keeping the rates low. If they raise them, everything will crash for real and they won’t be able to hide it anymore. Their lies will be out in the open. Americans aren’t dumb… they see what is going on and the games being played. Why do you think the voters are drawn to Donald Trump? Because he says he can fix the economy and bring jobs back. Trump says he will stop the destruction of the business sector, bring back manufacturing and make America an economic force to be dealt with once again. Americans just want to work their chosen professions, be secure in their homes and nation and get on with their lives. Janet Yellen and the other financial wizards in control are playing with fire when they play these games with the economy. Eventually, what goes up, must come down and the stock market is due for a massive correction. At that point, interest rates won’t matter much.
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