Yahoo Finance Unemployment rate to decline but Fed liftoff to hold until March: RBS
It's all about the economy as investors look for any clues on the health of the U.S. economy as the volatility on Wall Street continues.
As we head into the fourth quarter, the markets may be looking forward to putting the vicious third quarter behind. But the American consumer doesn’t seem to be phased by the stock market sell-off.
Both the August consumer spending data and September’s consumer confidence index rose. “I think what we’re seeing is a resilience among American households here, in the face of some volatility in the equity markets,” said Michelle Girard, the Chief Economist at Royal Bank of Scotland (RBS).
“The U.S. economy is in pretty solid shape, the concerns are more about global growth and I think that may explain why it’s easier for consumers to feel that things are still okay even though the equity market has been under pressure,” she added.
Still, the big question for investors is - when will the Fed start to raise interest rates? According to a Bloomberg survey, 84% of economists polled on September 25-28 expect an initial interest-rate increase in December.
Even Fed Chair Janet Yellen said she still thinks a rise is likely in 2015 if the economy develops as forecast. But Girard disagrees, “year-end is a tough time to be raising interest rates.”
She added, “I think it’s going to be tricky so that’s why my best guess is that they probably may end up having to wait until March to make that first move.”
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The labor market is a key data point the Fed is keeping an eye on. “I think Friday’s numbers are going to show the U.S. labor market does remain very solid,” said Girard.
“I actually think unemployment will hold at 5.1% for September but I think year-end, it’s going to be below 5%,” she said.
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