There is growing expectation that the sluggish economy will force interest rates to stay flat driven by a drop in business investment and a surprising lack of newly created manufacturing jobs.
While the economy added 173,000 more jobs last month, less than expected, there were other indications that the economy isn’t ready for the Federal Reserve to boost interest rates.
An analysis from the Alliance for American Manufacturing showed that President Obama’s 2012 campaign promise to create 1 million manufacturing jobs by the end of next year has come up way short. Worse: the new report shows that 17,000 were cut.
“The #AAMeter, which tracks President Obama’s promise to create 1 million new manufacturing jobs in his second term, decreased to +382,000 jobs, after revisions to previous months’ data,” said the group.
Meanwhile Lindsey Piegza, chief economist at Stifel Fixed Income, pointed to weak investment as another reason the Fed shouldn’t raise rates.
“We tend to agree,” she wrote in a memo to investors, “particularly given the multi-year low in manufacturing activity, as well as a two-month lull in service activity. Not to mention, six consecutive months of declining business investment, and still-modest growth in spending. This does not spell the type of economy gearing up for a rising rate environment.”
Paul Bedard, the Washington Examiner’s “Washington Secrets” columnist, can be contacted at [email protected].
