America’s Economy: Not sputtering anymore

New figures released by the Bureau of Labour Statistics showed the unemployment rate in America to be lower than 6% – the first time since 2008.  Total employment increased by 248,000 in the month of September.  Last month’s job growth was broad-based, with professional and businesses services such as accounting and engineering leading the way, followed by construction, retail and health care.  Large investments in fracking, leading to a surge in the US energy supply, seems to have helped America’s previous decline in manufacturing to be reversed, causing a rise in demand for labour in the manufacturing sector.  If the US economy continues on its upward trajectory, rising demand should begin increasing wages soon, as unemployment reaches a level where employers have to start paying more to find workers.

The revised growth figures have also resulted in the Federal Reserve saying that they might increase interest rates earlier than expected if the economy keeps growing (Interest rates have been kept near zero since the recession to fuel economic recovery).  Furthermore, since the report was published, the dollar has surged to a 4-year high as investors have interpreted the data to mean that the Federal Reserve will soon begin to tighten monetary policy.  Will America continue to see falling unemployment?  Should the Federal Reserve tighten monetary policy or is it still too early?

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