Skip to content

The 4.8% Unemployment Rate Sounds Great On Paper, but Participation Remains an Issue

September 12, 2016

Image

 It appears that rates will be staying put for a while.

The 4.9% unemployment rate is more impressive on paper than in reality. This is because the workforce participation rate remains an issue, particularly for men in their prime working years. President Obama’s Council of Economic Advisers reports 83% of men age 25-to-54 who are not in the labor force have not worked in the previous year. In other words, roughly 10 million men in their prime working years aren’t working and aren’t seeking work.

The fact is that we’re still recovering from the 2008-2009 recession, which is why we’ve always been skeptical about any impending interest-rate hike from the Federal Reserve. Trader enthusiasm for a rate increase has also subsided.

Today, traders are betting a 15% chance the Federal Reserve will move to raise rates on September 21. They’re still betting there’s a 47% chance we could see a rate increase by mid-December, but those odds have been falling.

All in all, the recovery has been good for housing and lending. For many of us, it’s business as usual. That said, it’s still not business as usual for many people. Other sectors of the economy still struggle through a recovery phase. For that reason, we don’t expect a rate increase until 2017.  

No comments yet

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out / Change )

Twitter picture

You are commenting using your Twitter account. Log Out / Change )

Facebook photo

You are commenting using your Facebook account. Log Out / Change )

Google+ photo

You are commenting using your Google+ account. Log Out / Change )

Connecting to %s

%d bloggers like this: