Federal Reserve Chairman Jerome Powell spoke last night at the housing conference in Washington and gave a very shiny outlook on the U.S. economy and the job market.
Was he preparing the markets for his interest rate call today?
Powell said, “Our economy is currently performing very well overall, with strong job creation and gradually rising wages. In fact, by many national-level measures, our labor market is very strong.’’
Yes, but he did leave out housing industry concerns, mortgage rates and the problems that many contractors are having with hiring; finding workers is becoming another headwind.
In my opinion, economists have no reason to be concerned about the pace of hiring. Being on track to a better than 3 percent GDP number, with the lowest unemployment rate since 1969, wages advancing to 3.1 percent from earlier this year—the best since 2009, per the Department of Labor—I would argue that it is the fastest hiring pace since 2006.
Moving forward, it is concerning that the housing market seems to be slowing. Hiring seems to have also met the headwinds that I talked about last year and wrote about in February. The Fed, which is wrong most of the time, is right in looking at the fundamentals of the economy. As a fundamentalist, I must agree that the clear majority of the economic fundamentals as they impact the economy remain very strong.
But, of course, we should watch some of the trends that we are witnessing today: slightly lower business sentiment, an increase in first-time unemployment claims, a construction slowdown and the geopolitical events concerning oil and trade.
But business hiring is staying strong, the unemployment rate is staying low, interest rates are below trend, and inflation is lower than wage increases. And let’s not forget one of the most important parts of an American growing economy—consumer sentiment, which is the highest it’s been on a consistent basis for more than 10 years.
Consumers are about as jolly this Christmas season as they’ve been in a very long time.
Dan Celia is president and CEO of Financial Issues Stewardship Ministries, Inc., and host of the nationally syndicated radio and television program “Financial Issues,” heard daily on more than 650 stations across the country and reaching millions of households on several TV networks. Visit www.financialissues.org.