Last Friday, the most recent employment report was released. It showed some encouraging figures. The number of jobs in the month of August was reviewed, the jobs outside the agricultural sector increased by 89 000 while a minor decrease was expected. Last month 111 000 new jobs originated. Analysts assumed that 100 000 jobs would have been created.
Those extra jobs and the higher wages will see to it that the consumption in the USA stays at the same level. Consumers' expenditure contains 66% of the gross domestic product in the US. From the previous figures we can derive that we don't yet have to fear a recession of the American economy. The American economy is perhaps weakening but not yet in scaring way.
Those extra jobs and the higher wages will see to it that the consumption in the USA stays at the same level. Consumers' expenditure contains 66% of the gross domestic product in the US. From the previous figures we can derive that we don't yet have to fear a recession of the American economy. The American economy is perhaps weakening but not yet in scaring way.
You can read in all the papers that the Fed will postpone its decision to lower the interest rate due to these 'good' employment figures. This will be very risky because those figures actually don't indicate a strong economy but a normal economy.
Lowering the interest rate was the action the Fed should take to stop the decreasing housing prices. Now the Fed finds this no longer necessary due to the 'strong' employment report.
They shouldn't confuse this report for an indication of a strong economy. They also should be careful about the report because it contains estimated figures. Many economists find it likely that the figures will be adjusted in a negative way. Once this shall be revealed, the Fed will be forced to lower his interest rate by 2% instead off 0.5%... .
Thomas
