What The Fed, Congress & FL Did To Affect The Economy
The Federal Reserve raised interest rates, Congress passed a budget, and Florida released its latest employment numbers last week. That’s kept economic analyst Hank Fishkind busy. 90.7’s Catherine Welch caught up with him to talk about the affects we’ll feel here in central Florida.
- Even though none of us can borrow money directly from the Fed at the new funds rate of 0.5%, the rate serves as a benchmark rate against which other short-term rates are set, such as the prime rate, auto loan rates, and many consumer rates. And all these rates rose by ½% last week based on the Fed’s increase.
- The U.S. economy is accelerating slowly with rising job growth and slowly rising earnings. These forces will more than offset the contractionary impact of rising interest rates in 2016. However, as rates rise in 2016 the value of the dollar will also rise as investors from around the world choose to invest in higher yielding U.S. debt driving the dollar higher compared to other currencies. This will inhibit our exports and stimulate imports slowing economic growth, and this will amplify the contractionary impact of rising rates in the U.S.
- The budget has a major increase in defense spending for both procurement and for construction. We produce an array of defense goods in central Florida that will be supported by the new budget. NASA got a big budgetary boost which is great for the Cape.
- Florida’s unemployment rate dipped to 5% and importantly, the labor force grew strongly as more people gained confidence that they could find work. However, even with this acceleration, job growth has slowed over the last 18 months. Compared to this year’s 241,000 new jobs, job growth totaled more than 275,000 in 2014. So, our job gains are very strong, but not as strong as last year.
Dr. Hank Fishkind is president of Fishkind and Associates. Hear him every Tuesday at 7:45am.v