The American economy continues to grow, albeit slowly, and the jobs markets has been generating enough jobs to keep us at or close to full employment without triggering inflation. The economy added 156,000 jobs last month, not seriously out of line with the 75,000-125,000 jobs that observers such as Loretta Mester, president of the Cleveland Federal Reserve bank, say the economy needs in order to provide jobs for our growing population and maintain full employment. The jobs increase was made possible in part by a rise in the so-called labor force participation rate to its highest level since March, meaning that workers continue to leave the couch for the labor market, just as Federal Reserve Board chair Janet Yellen predicted they would.
All of which would suggest that the Fed’s monetary policy gurus could let the New Year ring in without raising interest rates, increasing the number of corks that will pop on Wall Street and in the offices of major exporters. But “could” doesn’t mean “will”. When Janet Yellen was appointed to chair the Fed’s board of governors, I read her pre-appointment speeches deploring the social consequences of unemployment and, tongue-in-cheek, predicted in one of these weekly emissions that I could predict the date on which she would raise rates—”Never”. But now there is a reasonable prospect of a modest interest rate rise in December.
