Two related topics have defined our news cycle of late. The first is the deep populist discontent in the face of prolonged tepid economic growth rates and anemic labor markets. The second is that the Federal Reserve is once again uncertain about whether to raise the interest rate above the near-zero level where its lingered since December 2008. As recently as September 24, 2015, Fed Chairwoman Janet Yellen warned the financial markets that the low rates would not be kept forever, and that firms should adjust by gradually increasing wages. But less than one month later, her plan seems to have been derailed by the disappointing performance in wages, job creation, and consumer spending. The new thinking is that the Fed wants to wait until prices and wages firm up before it begins raising rates. It may wait until 2016 or later. Some experts, like former Fed advisor Andrew Levin, recommend interest rate increases be postponed until the labor markets are nursed back to health.
10.19.15