December 8, 2023
Today’s jobs report signaled this American economy is nowhere near recession territory.
But it may not be good news for those of you waiting for those interest rates to go down. I’ll tell you why in a second.
First – today’s jobs report came in better than expected. With the labor market adding 199,000 jobs and the unemployment rate ticking down to 3.7% in the month of November. These numbers did account for the workers who were on strike in November. The report found — even the number of people who were unemployed long term decreased since last month and last year. (seasonally adjusted long-term 27+ weeks Nov. 2023=1,150,000 October 2023=1,282,000 November 2022=1,215,000)
So where were all these new jobs? Mostly in the health care sector (+77,000). But also in government (49,000), leisure and hospitality (40,000) and manufacturing (28,000).
So when you add the sectors together you get almost 200-thousand jobs added to the payrolls in November. That’s solid growth but definitely not the explosive growth we were seeing last year. And that’s exactly what the federal reserve wants to see – a cooling off of the amount of jobs being added which will hopefully help to cool off this economy and get the inflation down.
But – here’s where the interest rates come in. The Federal Reserve is going to be meeting next week to decide whether they should increase, pause or decrease interest rates. They will take into consideration lots of factors – including this jobs report to make that decision. It’s almost certain based on this report and others I’ve reported on this channel…a decrease in rates is not an option this month. An increase in rates is also pretty unlikely because the recent economic reports have showed the higher rates are having an effect on cooling inflation. So – the most likely scenario is they will be pausing rates this month.
But what about the future? What about 2024? When are these rates going to come down? Well – the Fed Chairman has forecasted we could start seeing rate cuts in the spring or summer of 2024 but – if economic reports likes this one keep showing that inflation isn’t trending down, it’ll take the fed longer to feel confident enough to cut the rates.
Read the Jobs Report for November here.
