The Bureau of Labor Statistics released figures on Friday showing that the U.S. economy added 162,000 new jobs. Will this give the economy enough of a boost to send bank rates higher?
The short answer is that the jobs report may not have been strong enough to have an immediate impact on bank rates, but it is a step in the right direction.
For a year now, savings account rates, money market rates, and CD rates have been at extraordinarily low levels. They have not even responded to the re-emergence of inflation, and thus most bank rates are now negative on an inflation-adjusted basis.
This is partially a function of the Federal Reserve’s low interest rate policies, and partly a function of low demand for capital. Either way, the root cause is the same — a halting recovery from the worst economic downturn since the Great Depression.
While the economy grew in the fourth quarter of 2009, few people will be confident that the recovery can be sustained until there is meaningful growth in the job market. After all, the recession saw the unemployment rate reach 10% for the first time since the early 1980s. Getting people back to work will be a sign that businesses are seeing conditions as healthy enough to start hiring, and in turn those additional paychecks will add to economic demand.
In this regard, the 162,000 jobs added in March is good news not only for the individuals going back to work, but for the economy in general and thus for bank rates. Still, it can’t be viewed as more than a single step. Census hires and other temporary workers boosted the figures, and the number of people working part time grew. So, the jobs report wasn’t a giant step, but it was a step in the right direction.
Similar Posts:
- A Setback for Savings Rates
- Jobs Report Could Be Good Medicine for Bank Rates
- Making Sense of Unemployment Numbers
- Personal Spending and Income Increased in March and April
- Bank of England must ‘hold nerve’ on interest rate rise
