NEW YORK — The U.S. economy looks healthy again.
Many say it’s time — even past time — that America’s central bank stop the extreme life support measures that have been in place since the financial crisis.
America has added 12 million jobs since the recession ended in June 2009. Unemployment has fallen from a peak of 10% down to 5%, and even wages are finally starting to go up.
The latest economic check up on Friday showed that hiring remained strong through November.
Yet America’s central bank still looks like it’s in crisis mode.
Interest rates are at historic lows near 0%. They have been that way since December 2008 when the Federal Reserve was doing everything it could to jumpstart the economy, banking sector and housing market in the recession.
Today, the economy is no longer in a state of emergency, and many argue interest rates shouldn’t be either.
The job market’s strength, especially in the face of a global economic slowdown, is why the Federal Reserve will likely raise interest rates on December 16. It would be the Fed’s first rate increase in nearly a decade.
“The economy’s foundations are growing and the headwinds are subsiding,” argues Brad McMillian, chief investment officer at Commonwealth Financial Network. “What else could you ask for? World peace?”
Wall Street now predicts nearly an 80% chance of a rate hike.
However, there are still impediments. The Fed wants to see inflation move toward its 2% target. But with low gas prices and a strong U.S. dollar, annual inflation is close to 0%. And with little wage growth, many Americans haven’t benefited from the recovery.
Here are five charts laying out the landscape for the Fed. It’s not perfect, but it does appear ready for a rate hike.
1. Millions of jobs added since the recession
2. Unemployment is down dramatically since 2009
3. Weak inflation is not helping the Fed
4. Jobless claims are down by half since the peak
5. Wage growth finally showing signs of life