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U.S. employers just gave the Federal Reserve a lame excuse. The country added 151,000 jobs in August, 16 percent fewer than had been expected, while wage growth also was muted and the unemployment rate held steady instead of dipping. Even so, the gains have been trending solidly alongside other decent economic signals.
Over the last three months, growth in U.S. nonfarm payrolls has averaged a healthy clip of 232,000 new positions. Consumer spending has also been encouraging. Personal income and savings increased in July. Economic output is broadly expected to pick up for the rest of the year, especially considering the low inventories on record. Fed Chair Janet Yellen also said last month that the case for raising interest rates had strengthened.
After seven years at near zero, the Fed gently bumped up its benchmark federal funds rate to between 0.25 percent and 0.5 percent last December. Since then, it has been reluctant to move again. Geopolitical ructions, lower-than-expected inflation and tepid GDP growth all have been cited.
At the same time, even Yellen knows that a jobless rate under 5 percent means the Fed is very close to its goal of full employment. The most recent figures don’t alter that course. At this point, it’s beyond time to raise interest rates. Unfortunately, the so-so August means there’s another pretext to stall.