The burden of unemployment falls heaviest upon blacks and unfortunately, economic growth in important but is not sufficient. Even when US GDP grew at 6.7%, the unemployment rate for blacks averaged 10.6%.
The Federal Reserve is walking on thin ice. In talking down the economic recovery to rationalize low rates, it may be dampening investor and consumer confidence.
The US Economy is now recovering at a normal rate. As inflation fears rise, the Federal Reserve Bank will have to reconsider its pledge to keep interest rates fixed until 2014. Indicators to look for in the future are discussed.
Today’s Labor Department Jobs Report showed that the unemployment rate in February remained constant at 8.3% and 227,000 jobs added to the labor force.
The economy is growing at 3%, and the unemployment rate is 8.3%. The FED vows to keep interest rates fixed through 2014 and expects the improvement to be short lived. The Gazelle Index believes growth and employment will be sustained through 2012.
Overall 12.3% more small businesses will be hiring than will be cutting jobs during the first quarter. The largest job gains will occur in information technology, management and administrative services, health and education, and wholesale. .
The Gazelle Index Survey indicated that 26.6% of small businesses iwould hire during the first three months of 2012 while only14.4% of small businesses indicated they would reduce hiring. The survey results are consistent with national economic data.
The economy and President Obama’s positive approval ratings are improving. Auto sales and retail sales are up, new claims for unemployment compensation are down and Congress appears likely to pass the payroll tax cut extension.
To understand how the economy is doing, most people look to the unemployment rate. However, other indicators may be even more important. It all depends upon where the economy is in the business cycle.
Higher interest rates make it easier for people to get home loans because lenders receive a greater reward for taking risks on home mortgages. Since the economy is growing, the Fed should stop its low rate policy.