As we get closer and closer to the month of September, the discussions with regard to the Federal Reserve’s interest rate is coming up more and more. While no one knows exactly when the Fed is going to raise rates, we’ve seen quite a few predictions recently. As a matter of fact, a recent Fortune poll shows that 82% of economists are expecting the rate hike to happen in September. However, I’m not convinced that the US will be ready for a rate hike in September. Today, we’ll talk about the factors that may help drive a hike, the factors that I think are likely to hinder any increase in rates, and what we can expect to see moving forward. So, let’s get right to it…
Why Economists Believe A Rate Hike Will Happen In September
There are several reasons why economists believe that a rate hike is likely to happen soon. These reasons include…
Strong Job Growth – First and foremost, there has been quite a bit of discussion about jobs in the United States; and for good reason. Throughout the past several months, we have seen incredible growth in the number of jobs in the United States economy. As a matter of fact, in July alone, employers added 215,000 jobs to the US economy and held the unemployment rate at the lowest rate we’ve seen since April of 2008; 5.3%.
Increased Consumer Spending – While consumer spending was a drag on economic growth throughout the beginning of the year, that doesn’t seem to be the case anymore. As a matter of fact, consumers are starting to spend more; pumping more funding into the economy. According to the Wall Street Journal, US consumer spending rose by 0.6% in the month of July; which was right in line with economist expectations and shows that consumers are gaining confidence in economic growth in the nation.
Oil Exports To Mexico – As a result of a strong United States dollar, exports have been feeling the pain. However, recent movement may help to improve this figure. Recently, the United States lifted a 40-year crude oil export ban and started allowing exports to Mexico. While this move surely won’t cure the exports issue the United States has been facing recently, it certainly will help.
