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Experts were disappointed by employment numbers in December, which were lower than a month earlier. But despite this slowdown, they agreed that there is no reason to think the Federal Reserve will change its tone on raising interest rates in 2022.

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In December, the economy added 199,000 non-farm payrolls, a drop from the 210,000 jobs added in November, according to the latest employment status summary From the US Bureau of Labor Statistics (BLS). The Refinitiv Economists Were Hoping 400,000 new jobs, more than twice the actual job gain.

“This morning’s jobs report from the Bureau of Labor Statistics again paints an uneven picture of the labor market,” said Fannie Mae’s chief economist Doug Duncan. “According to the payroll survey, job growth in December stood at a disappointing 199,000, a decline from the pace of the previous month, although job growth in the prior two months combined was revised upwards to 141,000.”

However, Duncan pointed out that the unemployment rate dropped to 3.9%, which is a positive sign for the labor market.

Given the latest job growth and unemployment numbers, experts believe the Fed may still hike interest rates in the first half of 2022. If you want to take advantage of the current low rates, you may want to consider refinancing your mortgage to potentially reduce your monthly rates. payment. Visit Credible to know your personalized rate without affecting your credit score.

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The Federal Reserve may still raise rates

While the employment growth rate in December was lower than expected, economists were still optimistic, saying the unemployment rate pointed towards the economy reaching full employment.

“The unemployment rate is now 3.9%,” said Mike Fratantoni, senior vice president and chief economist of the Mortgage Bankers Association (MBA). “The economy is at full employment. Although the labor force participation rate is lower than it was pre-pandemic, it is not progressing far enough now, suggesting that the unemployment rate will continue to decline in 2022, even with sharp wage growth.” Ultimately HO brings more workers into the labor force.”

And experts say this low unemployment rate could prompt the Federal Reserve to raise interest rates, perhaps even sooner than previously thought.

“The Fed will monitor December’s jobs report to help set its timeline on tightening monetary policy, as the unemployment rate reaches a fresh pandemic-era high and there are fears of widening high wage inflation, which is expected to increase.” Could accelerate the Fed’s timeline,” said Odetta Kushi, the first US deputy chief economist.

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The Omicron version could derail economic progress

Despite the progress of the economy, one expert pointed out that the data for the December report was prepared before Omicron’s outbreak, and the version could cause disruption in the future.

“The Omicron version blanketed the nation before employment data was collected, turning entire regions into hot spots for community spread,” said Davit Kebede, senior economist at the Credit Union National Association (CUNA). “Therefore, the variant – although less severe than Delta’s – may temporarily derail progress in subsequent months.”

But despite that possibility, he said rising inflation is likely to prompt the Fed to continue on its current track of raising interest rates in the first quarter of 2022.

“A 3.9% unemployment rate is good news for the Federal Reserve which is on track to end its stimulus by March to fight inflation,” Kebede said.

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