According to the Los Angeles Times, the unemployment rate in the United States has dropped from a high of 10 percent in 2009, to five percent in November 2015. The construction and retail sectors in the United States have seen tremendous job growth, and that is helping to fuel an economic recovery. But as with all recoveries, the Federal Reserve is monitoring the situation and an increase in the prime interest rate could be on the horizon.
Job Growth Has Been Steady
According to Time Magazine, job growth has been going along at an average of 213,000 jobs per month for the past six months. This represents a tremendous increase over the past few years, and it comes from several factors. Economists see Americans spending more on homes and retail goods, and this has contributed to the growth in jobs in those sectors. The construction industry alone added 46,000 job in November 2015, and many of those jobs pay well above the average American salary.
Not Everyone Is Seeing Growth
While low oil prices are spurring auto sales in the United States, drilling companies are not ordering steel pipe and the other supplies they would normally need for exploration and extraction. In November 2015, the manufacturing sector lost nearly 1,000 jobs, and this is partly due to the lack of need for materials in the oil industry. With prices so low, the need for stocking oil and gas is diminished.
So Why Raise The Interest Rates?
Another reason that manufacturing is losing jobs is because of the strength of the American dollar. When the dollar is strong, goods that American companies try to sell overseas are more expensive. For the last several years, interest rates have been at record lows to try and spur investment in businesses. Now that the economy is recovering, those low interest rates are causing the dollar to spike in value. The Federal Reserve will be raising interest rates to regulate the value of the dollar and try to help the manufacturing sector to sell more products overseas.
Wages Slowly Increasing
Another sign that the economy and job market are recovering is the slow increase in wages over the past few months. Wages were up 2.3 percent from November 2014 to November 2015. Economists would like to see even further wage increases to help workers keep up with inflation.
The Federal Reserve was forced to slash interest rates when the Great Recession of 2008 hit the American economy. For years, the prime interest rate remained very low to help spur economic growth. Now that growth is occurring, the Federal Reserve will be forced to raise interest rates to help curb the rise in the U.S. dollar. These are all strong signs that the American economy and job market are on the rise, and that recovery is being sustained.
George N Root III is a professional freelance writer who has expertise in topics such as Internet marketing, business, advertising, and personal finance.