The economy added fewer jobs than expected in August, but other signs of improvement may be enough to convince the Federal Reserve to raise interest rates in a crucial decision expected this month.
Economists surveyed by The Wall Street Journal expected an additional 220,000 jobs in August, but the economy added just 173,000, the Bureau of Labor Statistics reported. And the number of Americans participating in the job market remained — for the third month in a row — at its lowest rate since 1977.
The rate has declined sharply since 2007, failing to recover even as the unemployment rate fell from double digits in the height of the 2008 recession to 5.1 percent in August. Just 62.6 percent of Americans at least 16 years old are either working or looking for work. (RELATED: Congress To Investigate Shrinking Labor Force Participation Rate)
But the drop in the unemployment rate, down from 5.3 percent in July, and some growth in wages for the second month in a row could be the improvement the Federal Reserve wants in order to justify raising interest rates.
Wages have generally been stagnant since the recession, even as the unemployment rate dropped and the economy again began generating hundreds of thousands of jobs each month. (RELATED: Wages Declined As Immigration Surged)
Since the 2008 financial crisis, the Fed has kept interest rates at or near zero percent by purchasing bonds in an effort to reduce unemployment and get the economy back on track.
Some lawmakers acknowledge the unusual policy may have been necessary for a short time following the crisis, but has now created another bubble by artificially propping up the market for too long.
So while raising the rates would signal a vote of confidence in the economy from the Federal Reserve, many lawmakers are anxious about the timing of the raise and potential unintended market volatility.
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