US ready for pre-emptive strike
ECONOMICS - THE WEEK IN VIEW
Your support helps us to tell the story
From reproductive rights to climate change to Big Tech, The Independent is on the ground when the story is developing. Whether it's investigating the financials of Elon Musk's pro-Trump PAC or producing our latest documentary, 'The A Word', which shines a light on the American women fighting for reproductive rights, we know how important it is to parse out the facts from the messaging.
At such a critical moment in US history, we need reporters on the ground. Your donation allows us to keep sending journalists to speak to both sides of the story.
The Independent is trusted by Americans across the entire political spectrum. And unlike many other quality news outlets, we choose not to lock Americans out of our reporting and analysis with paywalls. We believe quality journalism should be available to everyone, paid for by those who can afford it.
Your support makes all the difference.The likely timing of any rise in United States interest rates will become clearer after this Friday's payrolls report, which is expected to show the US economy is close to full employment.
Concerns that the Federal Reserve might sanction a pre-emptive rate rise to ward off inflation were raised last week, when Chairman Alan Greenspan gave a blunt assessment of the US economy in the first segment of his semi-annual report to Congress.
Last week Mr Greenspan warned for a second time of the dangers of "irrational exuberance" in financial markets. Although he said the "economy's prospects in general are quite favourable," he suggested the Fed may soon raise rates. He continues his testimony on Wednesday.
Friday's figures on non-farm payrolls will be the most closely watched of this week's reports and should show whether Mr Greenspan was right to have alerted investors to the dangers of inflation.
The consensus among economists is for a rise in new non-farm jobs in February of 204,000, down from 271,000 in January. That would take the jobless rate to 5.3 per cent, which is seen as close to the bottom. Average hourly earnings are expected to have jumped by 0.4 per cent on the month after January's figures were depressed by the bad weather, suggesting there is little slack in the labour market and that wage increases could trigger price rises.
Although economic growth is likely to slow in the first quarter to between 2 and 3 per cent from the buoyant 3.9 per cent seen in the final quarter of last year, there is little evidence that the economy is cooling significantly. Orders to factories for big- ticket goods rebounded in January, according to a report published on Thursday.
Manufacturing strength "plays into the camp that the Fed may have to tighten in the not too distant future," said Kevin Flanagan, an economist at Dean Witter Reynolds in New York.
In Europe, all eyes are on Germany's February unemployment figures, due out on Thursday morning. Figures last month showing German joblessness at its highest level since 1933 raised worries that social spending might derail the country's effort to meet the deficit targets for the single currency.
Economists are looking for a small rise of 23,000 in the number unemployed after January's rise of 160,000, which was the largest increase in a single month since the Second World War. Copyright: IOS & Bloomberg.
Join our commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies
Comments