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Payrolls Score Multiple Touchdowns (2006 Report)
Summary: A very solid gain in payroll employment in January, reinforced by upward revisions to November and December, suggest that economic growth remains healthy. The job gains were corroborated by a plunge in the unemployment rate to a cyclical low of 4.7% and a 0.4% rise in wage rates, bringing the year over year increase to 3.3%. Clearly, the labor market is doing well. A strong labor market affects household income directly, giving consumers the wherewithal to finance spending. These data give the Fed little reason to think that their efforts to contain growth to a non-inflationary pace have borne any fruit quite yet. Therefore, investors have good reason to expect more rate hikes.
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