From today's WSJ. As a reminder, there is a reason for the saying "dont fight the Fed".
The terrific news on the job market is bad news for the Federal Reserve and, by extension, anyone hoping for lower interest rates. The job market was already too hot for the Fed’s taste and just got hotter. Not only did demand for workers surge, the supply also shrank a bit: The labor force participation rate slipped to 62.1% from 62.2% (although it ticked up for those aged 25-54, to 82.4% from 82.3%). The unemployment rate matched its half-century low of 3.5%. Wages grew 0.4% on the month and at a 5.2% annual rate in the last three months, an acceleration from 4.7% in June. Strong payroll growth, steady hours and healthy wage growth all add up to ample income and spending power and continued upward pressure on prices. Many on Wall Street now expect the Fed to raise interest rates by another a 0.75 percentage point at its September meeting. —Greg Ip
www.wsj.com
