Unemployment Drops to 5%; Rate Hike in December Now Likely

[The_Doctor]

The Federal Reserve shouldn't raise interest rates. That, to me, is a fundamental misreading of the data. Inflation is not a real concern, given the fact that wages are only beginning to rise. The real economy hasn't been doing as well as the statistical data suggests, meaning that most people are barely making enough. Real wages are only beginning to grow (and we haven't established a pattern of sustained real wage growth). Inflation isn't about to spiral out of control, given the weak recovery and the fact there is a ton of deflationary pressures on the economy.

The fear of inflation is overblown. Putting the brakes on the economic expansion now in the hopes of making it a "guided expansion" is ridiculous (and has it ever worked successfully in the past?) As a Republican, I hope the Federal Reserve raises the interest rate (lessening chances of a Hillary win). But speaking strictly, I think it's a foolish policy idea.

[The_Doctor]

Tbh with the small bump in wages and the plethora of job openings, I will be somewhat surprised if unemployment falls below 5% soon, as I would have expected more people to enter the labor force and drive the rate up.

Honestly, to piggyback on my prior post and the discussion here, the reason the unemployment rate isn't going down further faster is because of a mismatch between jobs and skills. I think that deflationary pressures would significantly ease if more of the population had college degrees or certifications that matched the requirements for most of the still available jobs. Wages aren't growing in my view partially because of that, partially because of the overhang of debt (student debt, etc). Plus, consumer spending is finally taking off after people spending years paying off their debt and being more careful with spending.

Of course, labor participation is the lowest rate it is since the 1970s for a myriad of reasons (older aging population, maybe, early retirements, etc. I'm not really sure.).