A BRIGHT MOMENT 100918
By Isaac Cohen*
Federal Reserve Chairman Jerome Powell at a press conference, after the last Open Market Committee meeting on September 26, described the state of the US economy as “a bright moment.” This was just ten days before the Labor Department revealed that the unemployment rate in September reached 3.7 percent, the lowest in almost half a century. However, mainly due to the devastation caused by hurricane Florence in North and South Carolina, only 134,000 new jobs were created in September, less than the revised figure of 211,000 in August and under the monthly average of 182,000 in 2017.
Inflation remained slightly above the central bank’s 2 percent objective, despite last year’s tax rebates and increased public spending, which have pushed growth rate over 3 percent. Even so, salaries have increased just a bit above inflation, although in certain sectors, such as services, construction and among less educated segments of the labor force, paychecks are increasing above the national average.
In these conditions, the last Federal Reserve statement stopped using the term “accommodative,” to describe the monetary policy posture, anticipating there will be one additional interest rate increase this year, three more in 2019 and one in 2020. The objective is to reach a neutral level, where monetary policy does not restrict or stimulate the economy.
*International analyst and consultant, former Director ECLAC Washington. Commentator on economic and financial issues for CNN en Español TV and radio, UNIVISION, TELEMUNDO and other media.