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After having many different economic reports released about the month of February, the American people were more easily able to come to a decision about the state of the American economy. The economy was able to gain almost 100,000 jobs last month, which on the outreach sounds very strong. However, what must be more specifically noticed is that this gain of 97,000 jobs during February was actually the lowest gain of jobs since January 2005, meaning that even after Hurricane Katrina hit in fall of 2005, there were more jobs created.
However, another major part of the article that should be more closely looked at would be the decline on the unemployment rate from a rate of 4.6% to a rate of 4.5%. This was surprising as most economists had thought that the rate would stay even and had made their predictions based on this piece of information. What should be more important to notice on this bit of news is that the economy is not in the midst of a true recession, as most people have thought. The signs that we have received from the economy is that there have been almost 100,000 jobs created, a decrease in the unemployment rate and, most importantly, a greater than 2% increase in the inflation measure for the past 12 months. All of these signs point to an economy that is not in the middle of a recession but rather, on its way up in the economic cycle.
The next important meeting in which this will all be discussed will be when the Federal Reserve Bank meets to debate whether or not to cut short term interest rates. Most of the economists believe that the Fed will keep rates even, as they have since last summer. More importantly, what this data shows is that the economy is prepping to reach its peak of economic gain and because the economy is already gaining, the Fed should not be cutting or raising rates at all on the economy. However, if it were to turn out that some of the statistics were wrong and that in fact, unemployment was to stay the same at 4.6%, look for the Fed to cut rates again from their present rate down one-quarter point, to try to jump start the economy again.
http://money.cnn.com/2007/03/09/news/economy/jobs_february/index.htm?postversion=2007030915
