Unemployment drops to 4.6%, lowest since 2007

— NEW YORK — America kept hiring amid election shock.

The U.S. economy added 178,000 jobs in November, the Labor Department reported Friday, and the unemployment rate fell sharply to 4.6% from 4.9% in October.

It’s the lowest rate since August 2007.

Unemployment has been at or below 5% for nearly a year as more people have returned to the job market and hiring has maintained momentum.

November was the 74th consecutive month America added jobs.

“The positive momentum we’ve seen in the labor market is continuing as 2016 comes to a close,” says Sam Bullard, senior economist at Wells Fargo.

Wages rose 2.5% in November from a year ago, though that marked a slight slowdown from October.

The unemployment rate dropped for three main reasons. The number of jobless workers decreased, while the number of people with jobs increased. The total size of the labor force — which includes both employed and unemployed people — also decreased.

Together, those three factors pushed the unemployment rate down.

“Our best answer here is that more people stopped looking for work,” says Steve Chiavarone, portfolio manager at Federated Investors. “The headline numbers here are okay but the underlying numbers are less rosy.”

Health care, construction, government and business services led the way with solid jobs gains in November.

It’s the first major sign of the economy’s health since the surprise victory of President-elect Donald Trump.

Trump’s jobs promises have been in the spotlight this week. He reached a deal Tuesday with Carrier to keep about 1,000 jobs in Indiana that were slated to go to Mexico. It was Trump’s first key, post-election victory.

Trump’s broader message behind the Carrier deal was to increase the number of manufacturing jobs in America. That could prove difficult. Manufacturing employment was flat in November, and it’s been down most of the year. More than 250,000 jobs will be lost this year due to plant closing announcements, according to Challenger, Gray and Christmas.

The solid overall jobs numbers also clear the way for the Federal Reserve to raise its key interest rate on December 14 when its two-day meeting ends. It would be the Fed’s first and only rate hike this year and its already highly expected that the Fed will raise rate in two weeks.

A rate hike is a sign that the economy is improving.

“The upshot is that the labor market appears to be approaching full employment,” says Paul Ashworth, chief U.S. economist at Capital Economics.

September jobs report: 4 things to know

— NEW YORK (CNNMoney) — America is getting one of its last checkups before the election.

The Labor Department will publish the September jobs report at 8:30 a.m. ET Friday. Amid campaign promises of better jobs, wages and economic growth, the report serves as a reality check. And this one could be historic.

Here are four things to know about Friday’s jobs report.

1. Good but not great expectations

Economists surveyed by CNNMoney forecast that the economy added 175,000 jobs in September. That would be up from the 155,000 jobs gained in August.

Unemployment is projected to go down a bit, to 4.8% from 4.9%. Unemployment fell below 5% this year for the first time since 2008 — a sign of the job market’s recovery from the Great Recession.

And wage growth should show more signs of life, economists believe. Wages are projected to have grown 2.6% in September compared with the year before. That’s well below what the Federal Reserve wants to see — 3.5% — but better than the meager 2% growth of prior years.

2. 15 million jobs?

If the economy added at least 51,000 jobs in September, the United States will have gained 15 million jobs since U.S. employment hit its low in February 2010. That’s the measure the Obama administration commonly uses, not accounting for the steep job losses in 2009.

If you include those losses, the economy has gained 10.6 million since President Obama took office.

No matter the time frame, the job market has been one of the brighter spots in the slow recovery from the Great Recession.

3. September AND August matter

Job gains in September will be the big news on Friday, but don’t discount the August jobs number, which will be revised. August’s job gains are often significantly revised because it’s a hard month to get a read on.

With college kids returning to school, teachers still on summer break and would-be job seekers on vacation, August tends to be a volatile month for job gains. Friday’s new number should be more accurate.

4. Fed rate hike in sway

Federal Reserve leaders have hinted they plan to raise interest rates in December — if the economy holds up until then.

Right now Wall Street predicts there’s a 55% chance of a December rate hike. A good jobs report would boost those odds.

The jobs report is one of the most important metrics for the Fed when it considers raising rates.

For example, Fed chair Janet Yellen said in May that a rate hike over the summer would be “appropriate.” The following week, the awful May jobs report came out, and Yellen and her colleagues reversed course and didn’t raise rates all summer.

There was some divide at the Fed’s last meeting: Three of 12 voting members wanted to raise rates, an unusually high amount of discord. September’s jobs report could strengthen — or weaken — the case for a rate hike in 2017.

5 takeaways before the Fed’s big day

— Market mayhem. Negative interest rates. Growing jobs and wages.

The Federal Reserve is digesting all the craziness of the start of 2016 at its two-day meeting, underway Tuesday. The Fed’s committee will announce its plan for interest rates and its outlook on the U.S. economy at the end of its meeting.

The Fed’s decision on interest rates comes at 2 p.m. on Wednesday and Fed Chair Janet Yellen speaks to the media at 2:30 p.m.

Here are 5 takeaways to know before the Fed’s big announcement.

1. Nobody is expecting a rate hike

Seriously, investors are betting there’s a 0% chance of the Fed raising rates at its current meeting, according to Fed fund futures tracked by CME Group.

The Fed raised rates in December for the first time in nearly a decade. Its committee projected that it would raise rates four times in 2016. But after all the market volatility at the beginning of the year, fears of a ripple effect from China’s slowdown and falling oil prices, it appears the Fed could change its expectations on future rate increases.

After all, central banks in Japan and Europe are implementing negative interest rates, which could inspire the Fed to pump the brakes a little.

2. Lots of dots to plot

The big key will be the Fed’s forecast for the economy and rate hikes. The Fed estimates are presented on a “dot plot” — which is literally a chart with dots indicating where each member of the committee believes interest rates will be in a year.

Right now, the Fed’s key interest rate is at about 0.25% — really low. And most Fed leaders expect rates will be at 1.25% by the end of 2016, which would mean implementing about three or four rate hikes this year alone.

However, those projections could change significantly and investors will be on the lookout for this key chart. The dot plots could move markets on Wednesday.

3. Inching closer to 2

Yellen and her Fed colleagues are already happy with America’s job market. The unemployment rate is 4.9%, which is very good. Many Americans are finding work and there are signs that wages are starting to go up.

What’s been missing for years is inflation. The Fed wants to see inflation hit 2%.

Yellen has said the Fed only needs to see inflation move towards 2% to raise rates more. And that’s exactly what’s been happening in the last three months. Inflation is only at about 1.3%, but it has steadily increased.

To better understand the Fed’s rate hike plans, the key is to listen to how optimistic or pessimistic Yellen is on inflation.

4. Markets like Yellen

Investors hang on to her every word. And more recently, they like what she’s saying.

Yellen and her colleagues don’t want to surprise markets. Surprises cause uncertainty, which usually leads to a market selloff.

When the Fed raised rates on December 16, the Dow bounced up 224 points. (True, it dropped sharply the next two days but it also made back much of the losses in the following week).

And In October too, the Dow rallied after the Fed’s meeting.

“I certainly don’t think they’re going to do anything that’s going to upset the markets,” says Mark Heppenstall, chief investment officer at Penn Mutual Asset Management.

5. Rate hike around the corner

We almost certainly won’t get a rate hike Wednesday, but investors believe there’s a 50% chance of a rate hike in June. It’s also possible that the Fed raises rates at its next meeting in April. It all depends how good (or bad) the U.S. economy gets going forward.

What a Fed rate hike means for you

— America, get ready for higher rates.

The Federal Reserve is widely expected to raise its key interest rate Wednesday for the first time in nearly a decade.

Millions of Americans will be affected as rates go up. If you have a credit card or savings account, invest in a 401(k) or in the markets, or want to buy a home or car, now’s the time to pay attention.

The Fed slashed interest rates to zero in December 2008 to stimulate the economy and boost the housing market during the depths of the Great Recession.

A rate hike “will be a testament…to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession,” Fed Chair Janet Yellen said in a recent speech.

Still, it won’t be a game changer overnight. Rates are expected to go up at a slow, gradual pace.

Here’s what you need to know about how the Fed’s action will affect you.

1. Big ticket buyers: don’t rush, rates are still low

If you’re in the market for a home or a car, you don’t need to rush and get it done tomorrow. But it’s a good time to pay attention and start preparing to take the big decisions.

Interest rates are low but are slowly expected to start climbing next year.

The Fed determines the target rate for very short-term debt. But it also influences interest rates on credit cards, car loans and even long-term debt like mortgages.

None of the impact will happen overnight, experts say.

“Rates are pretty low and they’re not going to change much,” in the short term, says Dean Croushore, a University of Richmond professor and former Fed economist.

The Fed’s first move is expected to be small. Right now the Fed has a target range of 0-0.25%. It’s expected to go up to 0.25-0.50% — or by 25 basis points. In the world of interest rates, that’s very small.

The average interest rate on a typical 30-year fixed rate mortgage is 3.9% right now.

Ten years ago mortgage rates were near 6.3% and 20 years ago 7.2%, according to the St. Louis Fed. So yes, rates will likely be higher in a year but still low when compared to historical averages.

2. Savers see light at the end of the tunnel

Savers may not get to rejoice right away either, but there’s hope for the future.

If you put money in your savings account or have certificates of deposit, you earned almost zero interest in the last seven years. That will begin to change over the next couple years, even if it’s slow. Big banks won’t start offering higher interest on savers’ deposits immediately, experts say.

Still, the Fed’s first rate hike will be a step in the right direction. It means there will likely be more increases in the near future (the next 1-2 years), and that eventually will mean higher interest income on your deposits. Bottom line for savers: it’s good news, but you need to be patient.

3. Stock markets roller coaster could get more bumpy

If you invest at all in stocks and bonds — even if you just have a 401(k) — a Fed rate hike will be important to you and your portfolio.

It could trigger volatility in stock and bond markets, which are already on a roller coaster ride. Just last week, U.S. stocks had their worst week in months.

And there’s plenty of other factors that are already concerning investors: falling oil prices, China’s continued economic slowdown and actions from other central banks around the world.

Most other banks, like the European Central Bank, are moving in the opposite direction and cutting interest rates. China’s central bank cut rates in October too.

4. Dollar could gain versus global currencies

The divergence between interest rates in America versus other countries is expected to cause the U.S. dollar to become stronger.

That’s great news for world travelers, but it would hurt all types of U.S. companies that sell products abroad.

Also some investors are pulling their money out of global investments parking it in the U.S. — higher rates make assets priced in dollars more attractive.

Others are getting out of emerging markets like Turkey and Brazil. Those countries sometimes borrow loans that have to be paid in U.S. dollars.

Once the dollar’s value rises, those loans get more expensive and difficult to pay back. It creates financial stress and can lead to default and ultimately hurt the broader economy.

It’s already been a bad year for many developing nations. The MSCI Emerging Market Index, which captures stock market performance, is down nearly 20% so far this year.

So just be ready for a bumpy ride in the global markets.

5. Can the global economy get back on track?

The Fed’s actions have huge implications for the global economy.

The Unites States is linked more than ever before to major players around the world. China’s slowdown has hurt other emerging markets. Japan is barely growing. Europe is struggling with low economic growth too. It’s been a rough year for emerging markets across the board.

To varying degrees, all that weighs on the U.S. economy and the Fed.

The concern is that the Fed’s rate hike can cause a boomerang effect: (1) the Fed raises rates, (2) that hurts other economies even more, and then (3) economic woes in developing countries eventually hurt U.S. trade and economic growth.

The U.S. manufacturing sector has already shrunk as a result of the weak global economy and strong U.S. dollar.

The U.S. economy has made lots of progress since the recession, but it’s still not at the finish line, some say.

“We’ve come a long way from the depths of the recession, but we’re still not quite back to where we’d like to be,” says Croushore, the former Fed economist.


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Get ready for a rate hike: Fed looks close to liftoff

— Get ready: the long awaited rate hike could be here in 4 weeks.

The Federal Reserve’s committee members signaled that they’re close to raising the key interest rate for the first time in over 9 years. One Fed committee member already wants to raise rates, according to minutes from its two-day meeting that ended on July 29th.

“Some participants…viewed the economic conditions for beginning to increase the target range for the federal funds rate as having been met or were confident that they would be met shortly,” according to the minutes. Translation: some Fed officials are ready for liftoff in September.

The minutes are the last peek into the Fed’s thinking before its September meeting — when the majority of Wall Street experts expect a rate hike.

But the road to rate hike remains bumpy. The committee members aren’t unanimous about a rate hike yet, and concerns are popping up left and right.

China’s economic slowdown and its impact on the U.S. economy are worrying some Fed committee members. (The meeting happened before China devalued its currency).

Members also raised concerns about the turmoil in Greece and Puerto Rico. They also noted that Latin American economies — major U.S. trade partners — have also slowed down this summer.

They were also worried about lukewarm consumer spending by Americans so far this year. Sluggish wage growth remains another concern for the Fed, though committee members have said they don’t need to see wage growth before a rate hike.

The Fed also lowered its expectation for inflation. They want to see annual inflation around 2%, but they believe inflation will stay below their target for 2016 and 2017 now.

Consumer prices, which make up inflation, barely rose in July, according to the Labor Department. The slew of bad summer news could delay a rate hike, some experts say, but September still appears on the table at the moment.


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