MONEY

Fed Holds Rates Steady as Economic Plot Thickens

The Federal Reserve has said it won't raise rates before summer. But the economy picture is no less complex as the date approaches.

The Federal Reserve wrapped up a two-day meeting in Washington Wednesday, leaving short-term interest rates unchanged at near historic lows.

The move was widely expected: The central bank indicated as recently as December that investors weren’t likely to see a rate hike before summer. But the Fed’s actions were being closely watched nonetheless. With the summer deadline now two months closer, recent moves by the European Central Bank to bolster the continent’s economy have complicated the Fed’s upcoming choice.

The upshot is that for now U.S. consumers should be able to rest assured. Ultra-low interest rates mean borrowing costs for mortgages and other loans are unlikely to climb dramatically. But investors won’t have it so easy: Stock and bond traders will continue to fret about U.S. and European officials’ decisions, meaning more volatility like the sharp drop in Treasury yields (and rise in bond values) that took place earlier this month.

The Fed’s last meeting took place in mid-December amid feelings of increasing economic optimism. The U.S. economy had logged 3.9% GDP growth in the third quarter and the November jobs report was one of the best in months. That’s largely continued. Throw in an assist from cheap gas, and it’s no surprise the President Obama felt safe bragging about the ecomony in last week’s State of the Union.

In short, many Americans are beginning to feel like things are normal again. That’s usually the signal for the Federal Reserve to return interest rates to a more regular footing. Raising rates can slow economic growth — that’s why the Fed doesn’t want to move to soon. But keeping them low can stoke inflation. At 1.6%, well below the Fed’s 2% target, that’s not an immediate problem. The worry is that once inflation starts to rise, it can quickly get out of control.

The Fed’s decision is so tough this time around because it took such extraordinary measures to prop up the economy in the wake of the Great Recession. While so far the Fed’s strategy seems to have worked, no one likes being uncharted territory. Fed officials may feel some pressure to return monetary policy to something that feels normal.

One big problem, however, is that even as the U.S. economy has improved, much of the rest of the world continues to lag. Last week struggles in Europe prompted the ECB, Europe’s equivalent of the Fed, to undertake some extraordinary actions of its own, committing to buy tens of billions of dollars in debt each month in a new bid to stimulate the continent’s economy.

With the global economy so intertwined, the Federal Reserve has to worry weakness and instability overseas could put a drag on otherwise healthy U.S. economic expansion. In particular, the ECB’s move, the equivalent of printing billions of Euros, is likely to weaken the common currency against the dollar. That will make it more expensive for U.S. companies to export their goods — ultimately hurting profits and also providing another check on U.S. inflation.

The upshot is that if the Fed was feeling ready to act sooner rather than later, the situation overseas may be giving it second thoughts. Of course, the Fed has given itself until summer to decide. So it’s got some breathing room, if not quite as much as it did in December.

But in the meantime don’t expect jittery traders to sit tight. The Dow dropped 100 points after the Fed’s announcement from 17,452 to 17,319, while Treasury yields fell as bonds rallied. You can expect more of that kind of drama.

TIME Culture

What Unemployed People Do With Their Time

girls-chatting-cafe
Getty Images

While most of unemployed people spend a sizable part of their day job-hunting, plenty of others seem to, well, futz around

Last September, after I got fired from what was painfully close to being my dream job, I was gripped by aimlessness, malaise, and more than a little self-loathing. I imagined myself jobless, penniless, and miserable for the rest of my days. Then, I decided to seize this less-than-shining, underemployed moment to pursue my dream of writing full-time (in my case, as a freelance culture, news, and lifestyle journalist).

Though I was nervous about taking the leap into a profession that’s notoriously competitive and unlucrative, I felt ready to try something new: to work from home on projects of my choosing, without a Big Boss breathing down my neck. I’m lucky to be semi-successful at the freelance thing, because losing or eschewing a traditional job doesn’t always unfold so smoothly for everyone, millennials included.

MORE Lessons I Learned From Getting Fired

Traditional jobs can be hard to come by for millennials — who are shaping up to be the most educated generation in history (but not the most employed; in 2014, 9.1 percent of 18- to 29-year-olds were unemployed). While the job market is picking up for many, that uptick isn’t necessarily helping millennials, for whom job security has been rocky throughout most of their adult lives. As Andrew Hanson, research analyst at Georgetown University, said back in July, “Young people are the first to be let go by companies in a recession and the last to be let back in.” As of July 2014, millennials made up a whopping 40 percent of America’s jobless masses (that equates to 4.6 million people, in case you’re curious).

As usual, the statistics for women lead to a more complicated narrative. For women 25 to 54, unemployment is 30%. The number of working women has climbed overall during the later part of the 20th century, but those numbers have been sinking since 2000, partially due to economic trends, but also to a recent rise in stay-at-home parenting. (Notably, in wealthier areas, like the Salt Lake City suburbs and the Upper East Side of New York City, rates of women working are lower than in other US regions.) Rates of female unemployment are also higher in more rural and poverty-stricken regions, of course, like the Deep South, Appalachia, Northern Michigan, and various locations in the middle of the country. (Education, or lack thereof, plays a major part.)

MORE Why Getting Pregnant Cost This Woman Her Paycheck

Plenty of American men are jobless, too (in November, 5.4 percent of men over the age of 20). Unemployed guys, reports The New York Times, work out less and feel that they have worse relationships with their families than when they were members of a workforce. Women, on the other hand, are “more likely to say that their health and their relationships with friends and family have improved since they stopped working.”

Maybe that’s because, according to this New York Times interactive that documents the average daily activities of 147 unemployed men and women aged 25-54, females tend to spend a lot more time doing housework and “caring for others” than their unemployed dude counterparts; women spend a whopping six hours on both, while men spend less than three each.

And though plenty of unemployed people spend a sizable part of their day job-hunting, plenty of others seem to, well, futz around. They tend to sleep more than their working peers (slightly more than an additional hour), and devote much more time to entertainment like TV and movies — especially the men. Out of the 65 people who spent more of their day watching movies and TV than doing anything else, 46 were men; only 19 were women. And both men and women sans jobs “spend about 1.5 times as much time socializing as the average employed person.”

MORE Why It’s So Hard To Make New Friends

The day-to-day lifestyles of the thousands of Americans eschewing traditional 9-5 workplaces — either by choice or necessity — look dramatically different from those with “normal” jobs, indeed. But as more millennials struggle to find and hold onto jobs in a competitive, overcrowded market, it seems likely that their everyday habits will be forced to evolve, whether that includes six hours of TV, socializing, traveling, care-taking or…something else altogether.

This article originally appeared on Refinery29.com.

MONEY The Economy

Why These 5 Companies Are Laying Off Thousands of Workers

eBay Inc. office building, San Jose, California.
Kristoffer Tripplaar—Sipa USA

The economy is on the mend. Unemployment rates are down. So what's up with all these companies slashing jobs by the thousands?

Here’s some explanation—note we used the word “explanation” not “justification”—for why a handful of companies are laying off large chunks of their workforces even as the economy is on the upswing and unemployment is falling month after month.

eBay: 2,400 jobs
On Wednesday, eBay announced it would be cutting 2,400 jobs in the first quarter of 2015. The company says that the layoff figure includes positions that are unfilled, so the actual number of people losing their jobs will be less than 2,400. What’s more, eBay points out that the figure represents only 7% of the company’s total workforce. (Are we the only ones surprised to hear that eBay currently employs 34,600 people?)

Among the factors influencing the layoff decision: “Weak holiday sales” and revenues that have been lower than analysts expected, as well as a company restructuring in anticipation of the spinoff of eBay’s online payment service PayPal. The company said it may also spin off a third division, eBay Enterprises, which runs e-commerce operations for other companies, explaining in a statement: “It has become clear that [eBay Enterprise] has limited synergies with either business, and a separation will allow both to focus exclusively on their core markets.”

As for weak sales, one reason eBay is suffering is that, unlike Amazon—which effectively uses its Amazon Prime membership program to create legions of shoppers who make the vast majority of their purchases at its site—many eBay customers use the site randomly and haphazardly rather than habitually. “It’s the infrequent shopper that comes two, three, four times a year,” eBay CEO Donahoe told USA Today. “They didn’t come back at the rate we thought.”

American Express: 4,000 jobs
During the course of 2015, AmEx plans on cutting costs by trimming 4,000 jobs after failing to meet long-term revenue growth target of 8%. The Wall Street Journal pointed to “a stronger dollar, a weak December for retail sales and the sharp drop in gas prices” as forces that hurt the company’s fourth quarter results—which actually showed revenue and profits increasing, just not enough to satisfy investors. The 4,000 layoffs represent 6% of AmEx’s total workforce of roughly 63,000.

Baker Hughes & Halliburton: 8,000 jobs
The two energy companies agreed to merge last autumn, and both ended the year strongly, with Halliburton posting revenues up nearly 15% and Baker Hughes achieving record revenues for the quarter. Nonetheless, in light of plunging crude oil and gas prices, oilfield services provider Baker Hughes announced plans for layoffs of 11% of its workforce, roughly 7,000 employees, while Halliburton plans for about 1,000 job cuts of its own.

“This is really the crappy part of the job, and this is what I hate about this industry frankly,” Baker Hughes CEO Martin Craighead said this week in a conference call with analysts. “This is the industry, and it’s throwing us another one of these downturns, and we’re going to be good stewards of our business and do the right thing. But these are never decisions that are done mechanically.”

Schlumberger: 9,000 jobs
Another oilfield services company, Schlumberger also reported surprisingly strong fourth quarter results despite the steep drop in oil and gas prices—and it too recently announced big-time layoffs. Last week, the company said it had laid off 9,000 employees worldwide in late 2014 as profits fell and demand for oil retreated.

Read next: Here’s What You Really Need to Advance Your Career

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TIME Economy

Unemployment Rate Drops to 5.6% as Employers Add 252,000 Jobs

Pedestrians walk by a now hiring sign posted in the window of a business on Nov. 7, 2014 in San Rafael, Calif.
Pedestrians walk by a now hiring sign posted in the window of a business on Nov. 7, 2014 in San Rafael, Calif. Justin Sullivan—Getty Images

December marked the 11th straight month of payroll increases above 200,000

U.S. job growth remained brisk in December, with employers adding 252,000 jobs to their payrolls after November’s outsized increase. The nation’s unemployment rate fell to 5.6% from November’s 5.8%.

December marked the 11th straight month of payroll increases above 200,000, the longest stretch since 1994. With a revised 353,000 jump in November, and October’s count also revised higher, the economy created 50,000 more jobs than previously reported in the prior two months.

“The U.S. is sort of an island of relative strength in a pretty choppy global sea. People are worried the problems abroad could afflict the U.S., but our domestic fundamentals are pretty sound and should outweigh that,” said Josh Feinman, chief global economist at Deutsche Asset & Wealth Management in New York.

December’s gains capped a strong year for hiring. With another job creation number over 200,000, employment gains for 2014 at around 3 million — the largest since 1999.

A five cent drop in average hourly earnings after rising six cents in November, took some shine off the report.

Wage growth has been frustratingly tepid and economists believe the Federal Reserve will be hesitant to pull the trigger on raising interest rates without a significant increase in labor costs.

The U.S. central bank has kept its short-term interest rate near zero since December 2008. It has not raised interest rates since 2006, but recently signaled it was moving closer to hiking, even if inflation remains below the Fed’s 2.0 percent target. Most economists expect the first rate increase in June.

But an acceleration in wage gains is in the cards as the labor market continues to tighten.

That, together with lower gasoline prices are expected to provide a tail wind to consumer spending this year.

“As the labor market moves closer to full employment … we are likely to see firms increase wages. We have already started to see some of that,” said Sam Bullard, a senior economist at Wells Fargo in Charlotte, North Carolina.

Most of the measures tracked by Fed Chair Janet Yellen to gauge the amount of slack in the labor market have pointed to tightening conditions and would be again under scrutiny.

A broad measure of joblessness that includes people who want to work but have given up searching and those working part-time because they cannot find full-time employment is at six-year lows, the labor force appears to have stabilized, while the ranks of the long-term unemployed are also shrinking.

—Reuters contributed to this report

This article originally appeared on Fortune.com

MONEY Jobs

Why Is Employment Picking Up? Thank Government

public construction workers
Reza Estakhrian—Getty Images

After hurting the employment picture for so long, local, state and federal governments are finally adding to payrolls.

The U.S. economy continued its winning streak by adding 252,000 jobs in December, the 11th consecutive month employers hired more than 200,000 workers. The unemployment rate fell to 5.6%, a post-recession low, as various sectors (from business services to health care to construction) added to payrolls.

Boosting hiring isn’t exactly new when it comes to private businesses, which have been bolstering their staffing for every month for almost five years.

What’s different about the recent pickup in employment is the positive effect of governments (state, local and federal). While jobs aren’t being added at rapid pace, they have grown steadily over the past year, and are no longer subtracting from the labor market like they were not too long ago.

Government employment increased by 12,000 in December, compared to a reduction of 2,000 employees in the last month of 2013. Compared to a year ago, state and local governments throughout the country have added a combined 108,000 jobs.

As recently as last January the government shed 22,000 positions. Sustained, incremental growth beats much of the sector’s post-recession record, which saw employment drop off thanks to lower tax revenue and austerity measures.

Government payrolls increased by about 0.5% over the last year — which doesn’t look terribly good compared to the private sector’s 2.1% gain. But when you look at the recent gains against the 0.05% decrease in the twelve months before January 2014, you start to appreciate the recent uptick.

Gov't jobs

What’s going on?

Well, state and local government finances have stabilized and marginally improved over the past couple of years, giving statehouses and municipalities a chance to improve its fiscal situation.

Take this note from a recent National Association of State Budget Officers report which says, “In contrast to the period immediately following the Great Recession, consistent year-over-year growth has helped states steadily increase spending, reduce taxes and fees, close budget gaps and minimize mid-year budget cuts.”

The nation’s economy grew at an annualized 5% rate in the third quarter, after jumping 4.6% in the three months before. The trade deficit fell in November to an 11-month low, thanks in part to lower energy costs, which will help fourth quarter growth.

NASBO expects states’s revenues to increase by 3.1% in the next fiscal year, compared to an estimated 1.3% gain in 2014, with much of that spending dedicated to education and Medicaid.

With a more solid financial position, governments across the country are able to spend more on basic items, like construction. Public construction, for instance, increased by 3.2% last November compared to the same time last year, according to the Census Bureau.

Overall government spending has stopped following dramatically and actually picked up in the third quarter on a year-over-year basis.

Expenditure

Of course, government employment still has a ways to go before returning to normal. In the five years after the dot-com inspired recession, public sector employment gained by 4.5%. (It’s fallen by 2.8% since the recession ended in June 2009.) And while state budgets have normalized, Governors aren’t exactly flush with cash.

Says NASBO: “More and more states are moving beyond recession induced declines, but spending growth is below average in fiscal 2015, as it has been throughout the economic recovery.”

Not to mention hourly earnings fell by five cents, to $24.57, a decline of 0.2%.

Still, some employment growth is better than none at all.

Updated with earnings data.

TIME Economy

U.S. Employers Laid Off the Fewest People in 17 Years in 2014

Getty Images

Data are the latest indicator that the U.S. labor market is performing well

Job cuts announced by U.S.-based employers last year were 5% fewer than in 2013 and the lowest annual total since 1997, the latest indicator that the U.S. labor market is performing well.

Overall, employers announced job cuts totaling 483,171 in 2014, down from 509,051 cuts announced the prior year, according to a report by global outplacement firm Challenger, Gray & Christmas.

“Layoffs aren’t simply at pre-recession levels; they are at pre-2001-recession levels,” said John A. Challenger, CEO of the firm. “This bodes well for job seekers, who will not only find more employment opportunities in 2015, but will enjoy increased job security once they are in those new positions.”

Challenger’s report pointed out that while the economy and employment has grown in 2014, no job is ever truly secure as the nation still averaged about 40,000 planned job cuts per month. That’s because companies restructure their operations, announce cost-cutting moves or cut jobs when mergers and acquisitions are completed.

Notably, the tech sector, a relatively strong performer in the economy, saw the heaviest downsizing last year. That sector announced 59,528 planned layoffs. Challenger said that was a 69% increase from a year ago. Much of that downsizing was due to plans announced by Hewlett-Packard and Microsoft to each cut thousands of jobs. With both of their traditional businesses heavily tied to the PC world, the companies are pivoting to compete as the tech market moves to mobile devices where other rivals are stronger.

Job cuts in the retail sector declined by 11% in 2014 but the industry still ranked second. The third-ranked health care sector also posted fewer layoffs in 2014, Challenger said. Meanwhile, the largest increases in job cuts occurred among employers in the entertainment industry and electronics, where job cuts in 2014 more than doubled for both.

“We expect downsizing to remain subdued in 2015, as a growing number of employers turn their attention toward job creation,” Challenger said.

The biggest potential threat? Falling oil prices, which could result in higher job cuts in one of 2014’s star performers: the energy sector. Energy related layoffs only totaled 14,262 last year. In a nod to that possible soft spot, Challenger pointed to an announcement earlier this week that U.S. Steel would be laying off 756 employees due to soft demand related to weak oil prices.

“Lower prices mean less money for research, exploration and new drilling operations,” Challenger said. “However, the slowdown in oil-related industries may be more than offset by the extra dollars in consumers’ pockets as they shell out less money for gas and heating oil. The money not spent at the pump can be used for consumer goods, travel, home improvement, and dining out. Furthermore, continued low gas prices could spur an increase in SUV sales. All of these are going to have an immediate and positive impact on the job market and hiring.”

This article originally appeared on Fortune.com

TIME Economy

Private Sector Adds More Than 2.5 Million Jobs in 2014

At the current pace of job growth the economy could return to full employment by this time next year

The U.S. private sector has added more than 2.5 million jobs last year, and some economists say that if the pace of hiring continues, the nation could return to full employment by this time next year.

The rosy view can be attributed to the latest employment figures reported by payroll processor Automatic Data Processing and analysis provider Moody’s Analytics. Their report shows private-sector payrolls in the U.S. jumped by 241,000 in December, surpassing the 235,000 increase projected by economists. The U.S. private sector has now added more than 200,000 jobs for four consecutive months.

“At the current pace of job growth, the economy will be back to full employment by this time next year,” said Mark Zandi, chief economist of Moody’s Analytics. Full employment is when all, or nearly all, people who are willing and able to work are able to do so.

The gain in December was fueled by small businesses, which added 106,000 jobs last month. ADP defines small businesses as those that employ fewer than 49 people. Medium-sized businesses added 70,000 jobs last month, while large businesses (which employ 500 or more people) added 66,000.

By sector, the professional/business services and the trade/transportation/utilities industries added the most jobs in December, the report showed. Construction, manufacturing and financial activities employers also added to their payrolls.

The labor market had a stellar 2014, with gains in hiring across a range of sectors as U.S. economic growth encouraged many employers to add jobs. 2014 has been the best year for job gains this millennium, as Fortune previously reported.

The ADP report is issued two days before the federal government’s monthly jobs report, which includes the unemployment rate. Economists predict that Friday’s December jobs report will show U.S. hiring swelled by 245,000, while the nation’s unemployment rate is expected to dip to 5.7% from 5.8%.

This article originally appeared on Fortune.com

MONEY Economy

Why Your Paycheck May Not Grow With the Economy

500lb weight on top of money
Kiyoshi Togashi—Alamy

Though the job market is improving, workers might have to wait a while longer to see those big raises they've been waiting for.

You may have heard that the U.S. economy is back. The nation’s gross domestic product grew by 4.6% and 5% in the last two quarters—the strongest increase since 2003; Americans are more confident about the economy than at any time since the recession; and gasoline prices are as low as they’ve been in more than five years, amounting to a huge tax break for consumers and businesses.

No wonder employers felt strong enough to add 321,000 jobs to the economy in November, while the unemployment rate was at a post-recession low of 5.8%.

Still, many workers have not seen a pick-up in pay even as the employment climate has improved. In fact private sector wages declined by 5 cents (or by 0.2%) in December, despite the economy adding 252,000 jobs.

Total compensation, which includes benefits like medical insurance, rose 2.1% from the same period a year ago. That’s actually a slight uptick from the post-recession norm, but well below pre-2008 levels.

Which is weird. As demand for workers improves, and the unemployment rate declines, you’d expect inflation to rise and wages to increase.

One reason why wages have grown so slowly is that for much of the recovery there’s simply been a lack of demand for goods from consumers as many Americans worked to get out from the terrible effects of the housing crisis.

Since my spending is your income, more dollars saved and fewer spent mean less economic activity resulting in a weaker labor market. And since the Federal Reserve already dropped short-term interest rates to practically zero, and Washington lawmakers are reluctant or disinterested in further fiscal stimulus, marginal relief is coming from D.C.

Another explanation might have to do with the nature of compensation.

In a recent report, the Federal Reserve Bank of San Francisco highlighted the notion of “sticky” wages.

The argument goes: Since businesses were unable to reduce wages as much as they wanted when the economy got really bad five years ago (short of firing people), they are now not inclined to raise salaries as the economy lifts off.

If wages are rigid against a terrible economy, they’re stagnant (at least for a while) when the tide turns. “Businesses hold back wage increases and wait for inflation and productivity growth to bring wages closer to their desired levels,” says the report authors’s Mary Daly and Bart Hobijn. “Since it takes some time to fully exhaust the pool of wage cuts, growth remains low even as the economy expands and the unemployment rate declines.”

While there’s a bit of rigidity to all wages, the authors found “industries with the most downwardly rigid wage structures before the recession have seen the slowest growth during the recovery.” This means that businesses that were able to lower pay when revenues dried up have been more likely to increase wages as the good times returned.

So people in the wholesale trade business (truck drivers to sales reps) saw wages increase relative to pre-recession levels, while those in construction have to make due on less income.

What does this mean for workers?

“The rigidity of wages in a number of sectors has shaped the dynamics of unemployment and wage growth and is likely to do so until labor markets have fully returned to normal,” per Daly and Hobijn. And with still elevated levels of the long-term unemployed, high numbers of workers in part-time positions that want full-time ones, and fewer people quitting their jobs than before the recession, we’re still in not normal labor market territory.

Investors, especially older ones with larger holdings in fixed-income, should take note, too. Without higher inflation, and especially wage growth, the Federal Reserve is likely to delay raising rates.

While recent Fed meetings minutes have been interpreted as having a more hawkish tone, rates aren’t likely to rise (or rise quickly) while workers still struggle to make up lost ground.

Updated to reflect on Jan. 9 jobs report.

MONEY Jobs

Why Americans Finally Feel Better About the Economy

Smiling George Washington on dollar bill
Gary S. Chapman—Getty Images

It's been a long climb out of the Great Recession.

The recession ended in June 2009. The unemployment rate peaked in October 2009, and since then, it’s been almost cut in half. The labor market regained all 8.7 million jobs lost by June 2014. But for every week of the past six years, a majority of Americans have told Gallup that economic conditions were poor and/or getting worse.

Until now. Gallup’s U.S. Economic Confidence Index is a positive number for the first time since the beginning of the Great Recession.

To compute the index, Gallup takes the percentage of Americans who say economic conditions are excellent or good and the percentage who say the economy is getting better, and averages the two numbers. The index could theoretically be as high as +100, if every person polled said economic conditions were good and improving.

Today, the index is just +2. But after six years of negative economic confidence indices, any positive number is a milestone. And it’s been a great year-end: The unemployment rate fell to 5.8% in November. Both the S&P and the Dow hit record highs. And last month, we finally started to see some real, broad-based wage growth.

Americans might have more economic confidence if not for a number of other roadblocks. While the labor market has rebounded, an estimated 41% of job growth is in low-wage industries, which means Americans might not be able to find the high-paying jobs they need. Likewise, while wages are improving for low-wage workers, middle-class workers haven’t gotten much of a raise. And the long-term employed have struggled to re-enter the workforce—or have just stopped trying.

That said, the job market should continue to improve in 2015. And employers are getting worried about retaining talent—which means top performers may finally be in for a raise, or a higher-paying job somewhere else.

MONEY Federal Reserve

What Will the Fed Do Today? These Five Numbers Can Tell Us

With the economy and job markets finally looking healthy, the Federal Reserve may signal its first interest rate hike in years.

While you’ve been doing your Christmas shopping, the Federal Reserve’s Open Markets Committee — the club of officials who set short-term interest rates — has been meeting in Washington.

With the economy finally humming along, and interest rates still close to zero, market watchers are wondering how much longer the Fed will hold out before signaling its first rate hike since before the financial crisis.

That step isn’t likely to be taken Wednesday, when the two-day meeting concludes and the Fed issues an official statement. But economists do expect a significant change in the language that the Fed uses to telegraphs its policies.

In particular, the central bank has consistently stated that it will keep rates low for a “considerable time.” But a recent survey conducted by Bloomberg found that four-fifths of economists believe the Fed will drop the phrase today in order to signal a more aggressive time table — and that rates are actually likely to rise in the middle of next year.

In the meantime, here are five data points the Committee is likely discussing. The statement comes out at 2 p.m.

 

GDP

GDP

The economy is growing at a healthy pace. After a blip earlier this year — widely attributed to 2013’s severe winter — the economy grew 3.9% in the third quarter. Hiking interest rates would presumably help fight off unwanted inflation. But it would also slow economic growth and could even throw the country back into a recession. That was a much bigger risk when growth was crawling along at 1% to 2% rate. With growth close to 4%, the Fed may finally be getting ready to move.

 

Payroll

Jobs

Of course, GDP growth doesn’t mean much if you can’t actually get a job. And the employment picture has been downright sluggish in recent years, even at times when the broader economy was showing signs of life. But that’s finally started to change. The most recent jobs report, which showed the economy adding 321,000 jobs in November, was widely regarded as one of the best in years.

 

Inflation

Inflation

While GDP and jobs growth may be robust enough to justify an interest rate hike, the Fed may remain cautious for several reasons. The first one is that there is not much forcing its hand. Interest rates hikes are the central bank’s main weapon for fighting inflation. But with prices rising at less than 2%, there’s not much inflation to fight. That’s good news, meaning the Fed has flexibility to keep rates low if it seems helpful.

 

stocks

Stocks

Like the economy more broadly, the stock market is doing well — up about 12% so far this year. Nonetheless the Fed will want to avoid roiling markets with unexpected news. That’s what happened during 2013’s “taper tantrum” when markets slumped after the Fed let slip plans to taper off its stimulative bond purchases. Since economists are widely expecting the Fed to hint at higher interest rates, that seems unlikely this time…but markets are always fickle.

 

oil

Oil

While the U.S. may be looking rosier, there’s still plenty to worry about in the rest of the world. One dramatic manifestation of these fears: the sudden, sharp drop in oil prices. Booming economies tend to use a lot of energy. Weakening ones less so. In many ways cheap oil helps the U.S. It’s certainly been a boon to Detroit. But it can also have destabilizing effects. It’s the key reason the ruble has crashed in the past few days. It’s also the prime suspect in the U.S. stock market swoon in past two weeks. Shares have fallen nearly 5% since Dec. 5, including 112 points on Tuesday. Those jitters are one more reason the Fed may choose to tread carefully.

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