IS THIS THE BEGINNING OF A TREND? DOES THE RESERVE HAVE REAL CONFIDENCE IN THE UPCOMING ECONOMY?
This is only the second time in the last decade that the Federal Reserve has increased its rate, with the first being December of 2015. Now, not all loans will be affected, just the Federal Reserve have raised its target for short-term interest rates by 0.25 percentage points to a range of 0.50% and 0.75%.This does not seem like a huge story, but if you look at simple interest on a monthly basis, this equals $2,500, or equivalent to a $30,000 job. 179,470,000,000,000 annual GDP would make a loss of $448 million dollars out of the economy.When one takes an average income of $72,824, which is the U.S. census average, this would be a loss of 6,150 jobs!!!
While the Federal Reserve may have confidence, as an employee, one would need to worry if they work for a very large or very small company, while the middle-sized companies may continue to increase employees.
“Economic growth has picked up since the middle of the year,” said Janet Yellen, the Fed’s chair. “We expect the economy will continue to perform well.”
The Fed slashed rates to zero in 2008 in the midst of the financial crisis and kept it there during the so-called Great Recession and beyond, provided by CNN Money.
The Federal Reserve has strongly hinted that it could raise rates at a faster pace next year. Most Fed officials now project three or more rate hikes in 2017. In September, Fed officials predicted they would only raise rates once or twice next year. This is a huge change in the thought process and demeanor of the Reserve, which may give those in the corporate world question why now since this holiday season is not going as well as retailers had expected. Macroeconomic indicators suggest mediocre growth in retail spending this holiday season. Many consumers have more money to spend on holiday gifts this year, a function of lower unemployment rates, higher wages across the board, and lower consumer interest rates and gas prices. But offsetting these positive indicators are rising healthcare and housing costs, deflationary dynamics in the electronics and grocery categories, and volatility in the stock market. With extremely Cautious spending so far this year. Consumers have been somewhat slow to spend this year. Year-to-date sales growth in stores is 2.7%, below the 3.1% sales growth during the same period last year.
With the Federal Reserve releasing a new forecast Wednesday and it projecting U.S. economic growth this year to be 1.9% and next year to be 2.1%, both slightly better than the Fed’s previous projection in September, one would be harder pressed to have a negative outlook, but Consumerism is placed upon job growth, lower cost of goods from gas to food, and from electronics to clothing.
This new hatred for global access to lower cost markets and open trade agreements could quickly halt any positive outlook, and create just the opposite of the current Federal Reserve outlook. With the Hamilton electors promising a far from easy Trump electoral college election to widespread division in the country, all growth could quickly be taken back severely.Tags: Economy